Globalization and Firms' Financing Choices: Evidence from Emerging Economies

26 Pages Posted: 1 Feb 2006

See all articles by Sergio L. Schmukler

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Esteban Vesperoni

International Monetary Fund (IMF); University of Maryland, College Park

Multiple version iconThere are 2 versions of this paper

Date Written: July 2001


This paper studies the relation between firm's financing choices and financial globalization. Using an East Asian and Latin American firm-level panel for the 1980s and 1990s, we study how leverage ratios, debt maturity structure, and sources of financing change when economies are liberalized and when firms access international capital markets. We find that debt-equity ratios do not increase after financial liberalization. Debt maturity shortens for the average firm when countries undertake financial liberalization. However, domestic firms that actually participate in international capital markets extend their debt maturity. Financial liberalization has less effects on firms from countries with more developed domestic financial systems. Leverage ratios increase during crises.

Keywords: financing choices, financial structure, financial integration, financial globalization, international financial markets

JEL Classification: F3, G1, G3

Suggested Citation

Schmukler, Sergio and Vesperoni, Esteban Rodrigo, Globalization and Firms' Financing Choices: Evidence from Emerging Economies (July 2001). IMF Working Paper, Vol. , pp. 1-26, 2001. Available at SSRN:

Sergio Schmukler (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
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Washington, DC 20433
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202-458-4167 (Phone)
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Esteban Rodrigo Vesperoni

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

University of Maryland, College Park ( email )

College Park, MD 20742
United States

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