Financial Reforms, Financial Openness, and Corporate Borrowing : International Evidence / Enrica Detragiache, Gianni De Nicolo, Senay Agca.

Format:

Book

Government document

Author/Creator:

Detragiache, Enrica.

Contributor:

Ağca, Şenay.

De Nicoló, Gianni.

IMF Institute.

Series:

IMF Working Papers; Working Paper ; No. 2007/186

IMF Working Papers

Language:

English

Subjects (All):

Corporations--Finance.

Corporations.

International finance.

Corporate debt.

Physical Description:

1 online resource (49 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2007.

Language Note:

English

Summary:

We study how credit market deregulation and increased international financial openness have changed corporate borrowing. The evidence comes from a large panel of publicly traded firms in 38 countries over the period 1994-2002. Reforms are measured with a comprehensive new index that tracks six separate dimensions. We find that these transformations have increased leverage and lengthened debt maturity in advanced economies, as expected, suggesting that in these countries corporate credit markets have become deeper. In emerging economies, the picture is more mixed: more international openness has led to more leverage but shorter debt maturity. Financial sector reforms have reduced leverage, while their effects on debt maturity have differed depending on the type of reform. Importantly, the differential impact of openness and reforms on the leverage and debt maturity of firms in advanced and emerging market countries also emerges when we distinguish between firms that are potentially financially constrained and firms that are not. These findings suggest that in emerging economies fundamental institutional weaknesses make it difficult to secure the benefits of international financial openness and domestic financial reforms.

Contents:

Contents; I. Introduction; II. Literature Review; III. Data Overview; A. Leverage and debt maturity across countries and time; B. The domestic financial reforms index; C. Financial Openness; IV. Methodology; A. The empirical model; B. Firm level controls; C. Country-level controls; V. The Results; A. Leverage, debt maturity and firm characteristics; B. The impact of some country specific characteristics; C. The impact of domestic financial reforms and international financial openness; D. Disentangling the effects of financial reforms; E. Financial Constraints; F. Robustness; VI. Conclusion

Tables1. Descriptive Statistics; 2. Leverage, Financial Openness and Financial Liberalization; 3. Debt Maturity, Financial Openness and Financial Liberalization; 4. The Impact of Financial Openness and Financial Liberalization on Leverage and Debt; 5. Alternative Specifications with Financial Liberalization Index; 6. Alternative Specifications with the Components of Financial Liberalization Index; Figures; 1: Evolution of Leverage, Debt Maturity, DFL index and financial openness; Appendix; References

Notes:

"July 2007."

Includes bibliographical references (p. 45-47).

Description based on print version record.

ISBN:

9786613821362

9781462350780

146235078X

9781451999419

1451999410

9781282448179

128244817X

9781451912036

145191203X