Macroeconomic Influences on Corporate Capital Structure

9 Pages Posted: 1 May 2006

See all articles by Dinesh Gajurel

Dinesh Gajurel

University of New Brunswick - Fredericton; University of Tasmania, Tasmanian School of Business and Economics; Financial Research Network (FIRN)

Date Written: April 2006

Abstract

This paper provides new evidence of how macroeconomic conditions affect firms' capital structure choice in Nepalese context. The macroeconomic variables are significant for firm's capital structure choice. GDP growth rate and inflation revealed negatively related to leverage ratio whereas stock market capitalization revealed as positively related to leverage ratio. Higher economic growth tends to cause to use more long-term debt and as capital markets become more developed, they become a viable option for corporate financing.

Keywords: Capital Structure, Macroeconomy

JEL Classification: G32

Suggested Citation

Gajurel, Dinesh, Macroeconomic Influences on Corporate Capital Structure (April 2006). Available at SSRN: https://ssrn.com/abstract=899049 or http://dx.doi.org/10.2139/ssrn.899049

Dinesh Gajurel (Contact Author)

University of New Brunswick - Fredericton ( email )

Bailey Drive
P.O. Box 4400
Fredericton, New Brunswick
Canada

HOME PAGE: http://unb.ca/fredericton/business

University of Tasmania, Tasmanian School of Business and Economics ( email )

Private Bag 85
French Street, Sandy Bay
Hobart, Tasmania 7001
Australia

HOME PAGE: http://www.utas.edu.au/economics-finance/

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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