Institutions, financial markets, and firm debt maturity

We examine firm debt maturity in 30 countries during the period 1980-1991. In countries with active stock markets, large firms have more long-term deb t. Stock market activity is not correlated with debt levels of small firms, By contrast, in countries with a large banking sector, small firms have le ss short-term debt and their debt is of longer maturity. Variation in the s ize of the banking sector is uncorrelated with the capital structures of la rge firms. Government subsidies to industry are positively related and infl ation is negatively related to the use of long-term debt. We also find evid ence of maturity matching. (C) 1999 Elsevier Science S.A. All rights reserv ed. JEL classification: G20; G32; K10.