Dynamics in the Determinants of Capital Structure in the UK

Capital Structure Dynamics Working Paper No. 2000-9

37 Pages Posted: 16 Aug 2000

See all articles by Alan A. Bevan

Alan A. Bevan

European Bank for Reconstruction and Development (EBRD) - Office of the Chief Economist

Jo Danbolt

University of Edinburgh Business School

Date Written: May 2000

Abstract

In this paper we analyse the dynamics in the capital structure for UK companies from 1991 to 1997. We observe significant changes in the relative importance of the various debt elements over time, as well as changes in the relationship between gearing and the level of growth opportunities, company size, profitability and tangibility. Our results suggest that the nature of the credit market in the UK has changed significantly during the 1990s, with large companies using less bank finance, and banks increasingly lending to smaller firms. At the same time, bank debt appears to have become more closely related to corporate profitability and collateral values.

Keywords: Determinants of Debt Elements, Capital Structure Dynamics

JEL Classification: G32, G3

Suggested Citation

Bevan, Alan A. and Danbolt, Jo, Dynamics in the Determinants of Capital Structure in the UK (May 2000). Capital Structure Dynamics Working Paper No. 2000-9, Available at SSRN: https://ssrn.com/abstract=233551 or http://dx.doi.org/10.2139/ssrn.233551

Alan A. Bevan

European Bank for Reconstruction and Development (EBRD) - Office of the Chief Economist ( email )

One Exchange Square
London EC2A 2JN
United Kingdom
+44 20 7338 7725 (Phone)
+44 20 7338 6111 (Fax)

Jo Danbolt (Contact Author)

University of Edinburgh Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
UNITED KINGDOM

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