Abstract
Maturity mismatches in the financial sector have been extensively examined, but those in non-financial sectors have been largely overlooked. We explore why Chinese listed firms have a high short-term debt ratio from the perspective of asset-debt maturity mismatches, which involve firms using short-term debts to support their long-term investments. We investigate whether the maturity mismatch is actively or passively adopted by Chinese listed firms by analyzing the effect of financial constraints on maturity mismatches. We find that the mismatching behavior is more pronounced for firms with fewer financial constraints, supporting our active mismatch view. Reducing the cost of debt acts as an incentive for firms to actively adopt maturity mismatches. Our study thus identifies one reason for high short-term debt ratios in emerging markets.
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