Financial Liberalization and Corporate Debt Maturity in Thailand, 1993-97

Excessive short-term debt is thought to be one of the major causes of the Asian financial crisis, and this paper documents the changes in the maturity of corporate debt in Thailand during a period of rapid integration with international capital markets. Using data from publicly-traded Thai corporations for the period 1993-97, we find that the evidence is weak at best that financial liberalization brought about by globalization reduced the maturity of corporate debt contracts, and the evidence may in fact support an increase in maturity. This result casts some doubts on the generality of the idea that financial liberalization created the short-term debt problem.