Dynamics in the Determinants of Capital Structure in the UK
Capital Structure Dynamics Working Paper No. 2000-9
37 Pages Posted: 16 Aug 2000
Date Written: May 2000
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: Suggested Citation