ABSTRACT
The Asian financial crisis of 1997, which was triggered by financial turmoil in Thailand in June 1997 and then spread to the rest of East Asia,1 generated substantial interest in the nexus between financial globalization, financial liberalization, and corporate debt maturity. In particular, it has been argued that financial liberalization led to the shortening of debt maturity, since both firms and banks were given increased access and more choice over their portfolios without commensurate improvements in their long-term incentive structure and adequate prudential regulation. This in turn led to swift increases in macroeconomic fragility.
