Determinants of short-term debt: a note

Uncertainty and international debt maturity

“…A higher level of lending is generally associated with shorter debt maturity. Overall, the results are similar to those reported by Rodrik and Velasco (1999), Buch andLusinyan (2003), andValev (2006). Table 5 reports the estimates of six equations where the percent short-term debt and the percent long-term debt are explained by the same variables as above with the exception of output volatility.…”

“…The paper builds on work by Rodrik and Velasco (1999), Buch (2003), Buch andLusinyan (2003), andValev (2006) by investigating the effect of macroeconomic volatility on international debt maturity in conjunction with uncertainty generated by weak institutions. The effect of economic and non-economic uncertainty must be studied in a unified framework because the two are highly correlated and omitting one from an analysis might produce biased results.…”

“…more imports are expected to lead to more short-term credit. 7 Rodrik and Velasco (1999) and Buch and Lusinyan (2003) do not obtain a statistically significant effect on this variable. Eq.…”

“…A similar argument is made for the effect of financial sector development (FINANCIAL DEVELOPMENT), measured as domestic credit to the private sector as percent of GDP. Rodrik and Velasco (1999) and Buch and Lusinyan (2003) find that greater economic and financial development are indeed associated with a greater proportion of short-term debt.…”

“…The main question in this paper is whether economic and non-economic uncertainty in foreign countries contributes to a tilt toward short-term maturity in international debt. The paper uses data on international lending by U.S. banks to extend Rodrik and Velasco (1999), Buch (2003), Buch and Lusinyan (2003), and Valev (2006) by introducing an array of uncertainty variables to the list of variables used in those analyses. 1 In terms of economic uncertainty, Catao and Sutton (2002) show that countries with greater macroeconomic volatility are more likely to default on international loans.…”