The extent to which firms borrow short versus long term has generated much interest in policy and academic discussions in recent years. For example, concerns of a shortage of long-term investment in the corporate sector have led several institutions to promote policy initiatives aimed at extending the maturity structure of debt, which is often considered to be at the core of sustainable financial development (World Bank, 2015). There is also evidence that more short-term debt increases around financial crises, both as a cause and as a result of financial instability. However, there is little evidence on the actual maturity at which firms borrow around the world.
In a new working paper (Cortina, Didier, and Schmukler, 2016), we study how firms in developed and developing countries have used the expansion in different debt markets (domestic and international bonds and syndicated loans) to obtain finance at different maturities, and how their borrowing maturity evolved during the global financial crisis of 2008–09.
- Financial Sector