Using a large set of panel data for Ecuadorian firms, the authors analyze the role of capital market imperfections in investment decisions and investigate whether the financial reforms introduced in the 1980s in Ecuador succeeded in relaxing financial constraints. To facilitate capital...

The authors discuss two effects of financial liberalization, using panel data for Ecuadorian firms. After describing the main thrust of the reforms and the general macroeconomic developments, they document the changes that occurred in the firms'financial structure and in the allocation of...

Recent theory increasingly emphasizes the association of short-term debt with higher-quality firms and better incentives. The possibility of premature liquidation, for example, may serve as a disciplinary device to improve firm performance. At the same time the role of long-term debt, especially...