Macro and Micro Determinants of Capital Structure Decisions: Evidence from the German Manufacturing Industry

Authors : Seniha Besim

Pages : 898-917

Doi:10.24988/ije.1515793

View : 84 | Download : 85

Publication Date : 2025-07-16

Article Type : Research Paper

Abstract :This paper aims to examine the macro and micro determinants of capital structure. Since the factors influencing capital structure vary in significance and effect across different industries and countries, the study focuses on the manufacturing industry in Germany. The study incorporates three proxies for capital structure: total debt ratio, long-term debt ratio, and short-term debt ratio. Since firm leverage is a dynamic process, two-step system Generalized Method of Moments (GMM) estimators are employed in estimations. Among the macroeconomic factors, only changes in the inflation rate show a significant effect on the total debt. However, the influence of all three macroeconomic variables is deemed insignificant for long-term debt. Regarding short-term debt, only the lending interest rate is significant. For the micro-level determinants, tangibility, profitability, liquidity, age, growth, and size are important. In addition, utilizing a quadratic regression approach, this study finds that firm age has a non-linear effect on debt ratios.
Keywords : sermaye yapısı, firma düzeyinde faktörler, makroekonomik faktörler, imalat sanayi, iki aşamalı sistem GMM

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