Debt maturity across firm types: Evidence from a major developing economy*

- We study the debt maturity structures of Turkish non-financial firms during 2004-2013.
- Our dataset is new and substantially larger than those used in previous studies.
- Key determinants of maturity are leverage, firm size, asset maturity, and inflation.
- We also investigate maturity structure differences across firms of various types.
- The liquidity risk theory appears to more successfully account for the observed patterns.

Existing literature provides little guidance on whether various debt maturity theories are useful in understanding the debt maturity choices of firms that are privately-held, small, and/or outside the manufacturing industry in developing economies. This paper conducts a comparative test of the major debt maturity theories using a firm-level dataset that covers a wide variety of firm types in a major developing economy, Turkey. Our findings provide considerable support for the liquidity risk, agency, and maturity-matching theories. The macroeconomic environment also has an important impact on debt maturity. The evidence for the signaling and tax theories, however, is weak at best.