Has Debt Maturity in Europe Become Shorter?
Post by MSF Chula at Tuesday, 8 August 2017 10:35 AM

This study examines the impact of the euro on the debt maturity structure of the European firms. Since, the introduction of the single currency leads to structural changes in the European economies, then it may have an impact on the corporate debt maturity structure which is an important element of the firm’s financing decision. This study, therefore investigates whether debt maturity in the European countries has become shorter after the introduction of the euro and attempts to understand the changes in debt maturity. The sample consists of 1,436 publicly-traded bond issued by European firms. The evidence shows that the maturity of bond issued by the European firms become shorter after the introduction of the euro which the firm’s quality, term structure of interest rate and rating dummy are responsible for the decline in debt maturity in Europe. Moreover, this study provides the comparative picture of the UK and the US which are two major economies in the world. The results show that the maturity of bonds issued by the UK firms has become shorter while the maturity of bonds issued by the US firms has not becomes shorter as in the European firms after the implementation of the single currency.

Last updated at Tuesday, 8 August 2017 10:35 AM