Episodes of monetary contraction increases the risk premium of the enterprises which results in higher effective interest rate differential between market loans and subsidized loan; making these firms more reliant on subsidized loans. Since subsidies are easier to exploit and hard to administer....

This paper analyzes a source of financing for commodity producers known as a streaming loan, where the producer makes periodic payments in proportion to their level of production. Streaming loans functions like a cropshare contract, whereas fixed rate debt is like a wage contract. Thus,...

In contrast to the existing empirical research on the pecking order hypothesis which has been largely confined to the United States and a few other advanced countries, this paper attempts to test the hypothesis for an emerging economy through a case study of the Indian Corporate sector. A well...

This paper uses a new and comprehensive dataset to investigate the capital structure of non-financial firms in a major emerging market economy, Turkey. We study both statistical and economic significance of four types of leverage factors: Firm-specific, tax-related, industry-specific, and...

In a dynamic model of optimal security design, we show when firms should preserve "equity capacity" through choosing high target leverage or "debt capacity" through choosing low target leverage. Thereby, firms reduce a problem of underinvestment or overinvestment when they must raise future...

This paper reviews the impact of environmental variables on firms’ capital structure throughout the recent financial crises (dot.com bubble, subprime crisis, and European sovereign debt crisis). For the first time, the sovereign general gross debt and current account balance appear in the...

Building on the pecking order theory of Myers and Majluf, (1984) and Myers (1984), the present study empirically analyses the association between the board of directors’ composition and firm financing policies. Particularly, the fraction of independent directors on the board, the fraction of...

China’s coalmining fatalities were 140 times higher than the U.S. in the last decade. To shed light on this issue, we form and examinea unique panel dataset of 25,387 firm-year observations for China’s coalmining industry. We show that a firm’s leverage significantly determines its...

This paper examines the relative importance of many factors in the capital structure decisions of publicly traded American firms from 1950 to 2003. The most reliable factors for explaining market leverage are: median industry leverage (+ effect on leverage), market-to-book assets ratio (−),...

This study is an attempt to determine the factors that influence a firm’s choice of capital structure in three Asian countries: Japan, Malaysia and Pakistan. The specific objective is to investigate if country’s economic factors play a significant role in determining capital structure...