The Impact Of The Global Financial Crisis On The Corporate Debt Structure: The Reaction Of Latin American Countries
Unlike the other crises that originate in emerging countries, the global financial crisis of 2007 begins in the United States, causing different reactions in the micro and macroeconomic spheres of each country. The shock in the supply of credit stimulated companies to look for alternative sources of resources such as non-banks - public and private. This change in behavior has an even greater impact on those who are dependent on banks, in the moment before the onset of the crisis. For these companies, it is expected not only the replacement of third-party capital sources, but also the existence of a greater level of conflict of interest with creditors, which ends up reducing the maturity of their debts. In addition, with respect to the macroeconomic aspect, countries with better quality of their regulatory environment, guarantee to the creditors and greater competition of the banking market encourage the contracting of non-bank debt. These behaviors are verified, above all, in the developed countries. Therefore, this study aims to confirm if these hypotheses apply to the main countries of Latin America (Argentina, Brazil, Chile, Colombia, Mexico and Peru). For this purpose, a difference-in-differences test (DID) is applied in a sample of 520 publicly-traded and closed companies, whose data are collected in the previous (2003-2007) and subsequent (2008-2012) periods of the crisis. As a result, it is confirmed the hypothesis that,ina financial crisis environment, there is substitution of bank debts for non-banks debts. After the crisis, this substitution occurs not only for companies in general, but also for those with greater banking dependence and access to the capital market before the crisis. In addition, it is verified that the obtaining of non-bank credit occurs through public and private debts. This indicates that, in these countries, access to alternative sources of debt by companies is not limited to the issuance of fixed income securities such as debentures. Other options are also available to companies, characterizing a greater diversity and maturity of these markets. Regarding the change in the maturity of the debts, there is a reduction of long and short-term debts, after the financial crisis, regardless of the level of banking dependence of the companies, which does not confirm the hypothesis that, in a crisis environment, banks have an even greater impact on reducing the maturity of their debts. In times of financial crisis, there is a greater conflict of interests between creditors and debtors. Thus, banks prefer short-term contracts, since they allow for more frequent monitoring and a possible change in their terms, with the possibility of not renewing them.Moreover, the influence of the countries' regulatory environment is measured by the Kaufmann, Kraay and Mastruzzi index in the year 2007. It refers to an average six-dimensional estimate, being voice and accountability, political stability and absence of violence / terrorism, government effectiveness, regulatory quality, rule of law and control of corruption. The results indicate that a better regulatory environment encourages the substitution of non-bank banking debts after the global financial crisis. Thus, it is confirmed the hypothesisthat,in a financial crisis, a better regulatory environment favors the substitution of bank debts for non-banks. In summary, the main results are the substitution of bank debts for non-bank and private banks, reduction of debt maturity and relevance of a better level of governance or regulatory environment in the change in the structure of corporate debt.
Keywords: Financial crisis; debt structure; Latin America; Differences-in-differences; Regulatory environment; Bank competition