How Does Long-Term Finance Affect Economic Volatility?

A. Demirgüç-Kunt, Bálint Horváth, Harry Huizinga

Research output: Working paperDiscussion paperOther research output

201 Downloads (Pure)


In an approach analogous to Rajan and Zingales (1998), we examine how the ability to access long-term debt affects firm-level growth volatility. We find that firms in industries with stronger preference to use long-term finance relative to short-term finance experience lower growth volatility in countries with better-developed financial systems, as these firms may benefit from reduced refinancing risk. Institutions that facilitate the availability of credit information and contract enforcement mitigate refinancing risk and therefore growth volatility associated with short-term financing. Increased availability of long-term finance reduces growth volatility in crisis as well as non-crisis periods.
Original languageEnglish
Place of PublicationTilburg
Number of pages62
Publication statusPublished - 21 Jan 2016

Publication series

NameEBC Discussion Paper


  • debt maturity
  • finanical dependence
  • firm volatiliy
  • financial development


Dive into the research topics of 'How Does Long-Term Finance Affect Economic Volatility?'. Together they form a unique fingerprint.

Cite this