Maturity Mismatch and Financial Crises: Evidence from Emerging Market Corporations

UCSD Discussion Paper No. 2004-16

49 Pages Posted: 28 Feb 2005

See all articles by C. Hoyt Bleakley

C. Hoyt Bleakley

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

Kevin Cowan

Adolfo Ibanez University

Multiple version iconThere are 3 versions of this paper

Date Written: December 17, 2004

Abstract

Substantial attention has been paid in recent years to the risk of maturity mismatch in emerging markets. Although this risk is microeconomic 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 3000 publicly traded firms from fifteen emerging markets. We measure the risk of short-term exposure by estimating, at the firm level, the effect on investment of the interaction of short-term exposure and aggregate capital flows. 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 liquidate assets at "fire sale" prices, but not that this reduction in net worth translates into a drop in investment.

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 (December 17, 2004). UCSD Discussion Paper No. 2004-16, Available at SSRN: https://ssrn.com/abstract=672781 or http://dx.doi.org/10.2139/ssrn.672781

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

Adolfo Ibanez University ( email )

Santiago
Chile

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
136
Abstract Views
1,420
rank
89,349
PlumX Metrics