Leverage and the Maturity Structure of Debt in Emerging Markets

Research output: Contribution to journalJournal articlepeer-review

Abstract

The aim of this paper is to analyse for a multi-country large emerging market sample the choice between debt and equity simultaneously with the decision between short- and long-term debts. In order to investigate the joint decision among leverage and maturity, we examine an unique sample of 986 firms and 13,490 firm-year observations from Latin America and 686 firms and 7919 firm-year observations from Eastern Europe for the period 1990-2003. We employ dynamic panel data analysis using Generalized Method of moments. The empirical results support three main findings. First, the cross-effects between leverage and maturity behave exactly the opposite between Latin America and Eastern Europe sub-samples. Capital structure and debt maturity are policy complements in Latin America and substitutes in Eastern Europe. Second, there is a significant dynamic effects component in the determination of leverage and maturity. Finally, adjustment to the target, maturity is by no means costless and instantaneous with firm’s facing moderate adjustment costs.
Original languageEnglish
JournalJournal of Mathematical Finance
Volume3
Issue number3
Pages (from-to)46-59
DOIs
Publication statusPublished - 2013
Externally publishedYes

Fingerprint

Dive into the research topics of 'Leverage and the Maturity Structure of Debt in Emerging Markets'. Together they form a unique fingerprint.

Cite this