The determinants of capital structure

Ben Ukaegbu (London Metropolitan Business School, London, UK)
Isaiah Oino (Greenwich School of Management, London, UK)

African Journal of Economic and Management Studies

ISSN: 2040-0705

Publication date: 26 August 2014



The purpose of this paper is to investigate whether there are differences between the determinants of the capital structure in financial and manufacturing firms and also assess how the speed of adjustment differs.


This study employed balanced panels data procedure using pooled ordinary least square, the random effects and fixed effects on manufacturing firms and banks that are listed on Nigeria Stock Exchange. The use of the three estimation method is in order to make a meaningful comparison between the models.


The findings indicate that there are similarities and differences in the capital structure determinants on the two sets of firms: banks tend to be more leveraged when they are more profitable and manufacturing firms tend to be less leveraged when they are profitable. In addition, banks adjust their leverage faster at a speed of 69 per cent than manufacturing firms at 46 per cent. The study also shows that changes in the economy influence the capital structure of financial firms more than that of manufacturing firms.

Research limitations/implications

The study only focused on one economy.

Practical implications

As a result of 2008 global financial crisis, there has been intense debate on the significance of regulatory capital. The study demonstrate the need for regulatory capital in banks to be procyclical rather than being static.


To the best of the knowledge, this is the first paper to empirically test how capital structure differ between banks and non-financial institutions.



Ukaegbu, B. and Oino, I. (2014), "The determinants of capital structure", African Journal of Economic and Management Studies, Vol. 5 No. 3, pp. 341-368.

Download as .RIS



Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.