Maturity Mismatch and Financial Crises: Evidence from Emerging Market Corporations

64 Pages Posted: 22 May 2009  

C. Hoyt Bleakley

University of Chicago - Booth School of Business; University of Chicago

Kevin Cowan

Central Bank of Chile

Multiple version iconThere are 3 versions of this paper

Date Written: May 18, 2009

Abstract

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

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

C. Hoyt Bleakley (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Kevin Cowan

Central Bank of Chile ( email )

Agustinas 1180
Santiago
Chile

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