Debt Maturity and Financial Integration

39 Pages Posted: 16 Mar 2012 Last revised: 27 Feb 2014

See all articles by Angelos A. Antzoulatos

Angelos A. Antzoulatos

University of Piraeus - Department of Banking and Financial Management

Kostas Koufopoulos

University of Warwick - Finance Group

Costas Lambrinoudakis

University of Leeds - Leeds University Business School (LUBS)

Date Written: September 6, 2013

Abstract

This study applies the panel convergence methodology developed by Philips and Sul (2007) on the debt maturity ratios of a set of firms in developed economies, to explore the effects of credit market integration on debt maturity choices. In contrast to prior studies, our methodology allows for a formal quantification of the integration process. Therefore, we are able to track the evolution of integration over time and identify the conditions under which it is stronger. Firms that are able to integrate with international credit markets face a lower degree of informational asymmetries and have higher collateral value. Furthermore, as firms integrate with international credit markets, they extend their debt maturity. This evidence provides support to the argument that financial integration has a positive impact on firms, by facilitating access to long-term capital. On the contrary, firms not affected by credit market integration, experience a decrease in their debt maturity, as integration continues.

Keywords: Financial integration, Financial development, Debt structure, Leverage, Convergence

JEL Classification: F30, F36, G15, G32

Suggested Citation

Antzoulatos, Angelos A. and Koufopoulos, Kostas and Lambrinoudakis, Costas, Debt Maturity and Financial Integration (September 6, 2013). Available at SSRN: https://ssrn.com/abstract=2023153 or http://dx.doi.org/10.2139/ssrn.2023153

Angelos A. Antzoulatos

University of Piraeus - Department of Banking and Financial Management ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece

Kostas Koufopoulos

University of Warwick - Finance Group ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain

Costas Lambrinoudakis (Contact Author)

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

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