Early-Stage Globalization and Corporate Debt Maturity: The Case of South Korea, 1980-94

Using data from publicly traded South Korean corporations for the period 1980-94, this paper finds evidence that increases in financial liberalization that accompanied the more general process of financial globalization have significantly reduced the maturity structure of corporate debt contracts, thus lending partial empirical support to the idea that financial liberalization can be well described as “short-term pain, longterm gain”. This effect of financial liberalization on corporate debt maturity is robust to changes in econometric specification, and does not seem to be counteracted by opposing forces that tended to lengthen the maturity of corporate debt during the same period. JEL Classification: G32, G15, D92, E65, F39