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How regulation affects the relevance of bank-debt maturity as a control mechanism in developed countries

    Eleuterio Vallelado Affiliation
    ; Paolo Saona Affiliation
    ; Pablo San Martín Affiliation

Abstract

Improvements in transparency at the country level have modified the relevance of bank debt maturity as a control mechanism. The novelty of this research is that we provide empirical evidence that the maturity of bank borrowing is contingent on the characteristics of the regulatory and the institutional setting about corporate governance. The main implication of our paper is that corporate governance rules have greater influence in civil-law countries than in common-law countries in promoting efficiency in the use of bank debt maturity. The value of this paper is that our results confirm that the implementation of similar regulations on transparency across countries with different legal systems favors the alignment of the role played by short-term bank debt in addressing asymmetric information, agency costs, and inefficient liquidation.

Keyword : bank debt maturity, transparency, corporate governance, regulation, financial system, panel data

How to Cite
Vallelado, E., Saona, P., & Martín, P. S. (2017). How regulation affects the relevance of bank-debt maturity as a control mechanism in developed countries. Journal of Business Economics and Management, 18(1), 116-130. https://doi.org/10.3846/16111699.2016.1149878
Published in Issue
Feb 5, 2017
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This work is licensed under a Creative Commons Attribution 4.0 International License.