64 Pages Posted: 22 May 2009
Date Written: May 18, 2009
Substantial attention has been paid in recent years to the risk of maturity mismatch in emerging markets. Although this risk is micro economic in nature, the evidence advanced thus far has taken the form of macro correlations. We evaluate this mechanism empirically at the micro level by using a database of over 3,000 publicly traded firms from fifteen emerging markets. We measure the risk of maturity mismatch by estimating, at the firm level, the effect on investment of the interaction of short-term exposure and aggregate capital flight. This effect is (statistically) zero, contrary to the prediction of the maturity-mismatch hypothesis. This conclusion is robust to using a variety of different estimators, alternative measures of capital flows, and controls for devaluation effects and access to international capital. We do find evidence that short-term-exposed firms pay higher financing costs, and have lower equity valuations, but not that this reduction in net worth translates into a drop in investment or sales.
Keywords: maturity mismatch, investment, financial crises
JEL Classification: E22, F41, G31, G32
Suggested Citation: Suggested Citation
Bleakley, C. Hoyt and Cowan, Kevin, Maturity Mismatch and Financial Crises: Evidence from Emerging Market Corporations (May 18, 2009). Chicago Booth Research Paper No. 09-18. Available at SSRN: https://ssrn.com/abstract=1407724 or http://dx.doi.org/10.2139/ssrn.1407724