Debt maturity, financial development and legal institutions: a multilevel analysis in Latin American companies

ABSTRACTThis research investigates the influence of different factor groups in corporate debt maturity in Latin America. We used the Hierarchical Linear Model, which allows nesting variables at different levels. Throughout the study, we performed a factor analysis in order to measure the level of financial development and institutional quality in the countries of our sample. The results suggest that variations over time and between firms are the major sources of variations in corporate debt maturity. Moreover, the size and the liquidity of the firm, the real interest rate and the financial development of the country stand out as factors that significantly influence corporate debt maturity. Finally, financial development and institutional quality factors indirectly affect the corporate debt maturity through the firm size variable.