Impact of institutional quality on the capital structure of firms in developing countries

Matemilola, Bolaji Tunde; Bany‐Ariffin, A.N.; Azman-Saini, W.N.W.; Nassir, Annuar

doi:10.1016/j.ememar.2019.04.003

Cited by 44 publications

(76 citation statements)

References 53 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…This positive relationship still holds if we use individual components of institutional quality. These results concur indirectly with Matemilola et al (2019), who found that improved institutional quality is positively related to more usage of debt by firms in developing economies.…”

Section: Joint Effects Of Creditor Rights and The Degree Of Legal Enforcementsupporting

confidence: 89%

“…Awartani et al (2016) find that firms in the Middle East and North African countries with a higher rule of law and regulatory effectiveness tend to have higher debt ratios. Matemilola et al (2019) show that differences in legal systems and the level of corruption account for corporate leverage variations. We draw on the work of Moro et al (2018) to extend the role of institutional settings to the demand-side constraints of SME financing.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The ex‐ante Effect of Law and Judicial Efficiency on Borrower Discouragement: An International Evidence

Khan

Ullah

2021

Asia-Pac J of Fin Stud

View full text Add to dashboard Cite

We investigate whether cross‐country differences in the legal system influence demand‐side credit constraints. We explore the notion of discouraged borrowers — firms that choose not to apply for bank credit because they anticipate rejection. Employing survey data from 46 economies, we find that rapid and less costly court proceedings, lower procedural complexity in court processes, and higher recovery rates under bankruptcy lead to the lower likelihood of borrower discouragement. These results are more pronounced in countries with strong creditor protections in relation to company reorganization and liquidation. The results corroborate the supply‐side view that strong creditor rights and their efficient enforceability alleviate banks’ participation constraints in the loan market, thereby encouraging small and medium‐sized enterprises to apply for credit in the first place. We also find that differences in institutional settings, such as higher regulatory quality, better control of corruption, and the rule of law, lead to lower rates of credit self‐rationing in the loan market.

show abstract

Section: Joint Effects Of Creditor Rights and The Degree Of Legal Enforcementsupporting

confidence: 89%

Section: Introductionmentioning

confidence: 99%

The ex‐ante Effect of Law and Judicial Efficiency on Borrower Discouragement: An International Evidence

Khan

Ullah

2021

Asia-Pac J of Fin Stud

View full text Add to dashboard Cite

show abstract

“…They are not reported but are available upon a reasonable request. Besides, we followed the example of Matemilola, Bany‐Ariffin, Azman‐Saini, and Annuar (2019) to reduce the six governance indicators into one index by finding the average index. We then used it to perform a new set of regressions.…”

Section: Regression Results and Discussionmentioning

confidence: 99%

Drivers of credit union penetration: An international analysis

2020

View full text Add to dashboard Cite

We investigate the drivers of credit union penetration with data from 90 countries for the period 2005–2017. Generally, the results show that the number of credit unions, the level of financial development of a country, the level of industrialization of a country, and the institutional environment are significantly supportive of credit union penetration. We conclude that the elimination of restrictions on the formation of credit unions (if any), the adoption of industrialization as development path, the implementation of sound monetary and fiscal policies that promote financial development, and the pursuit of good public governance are crucial for credit union penetration.

show abstract

“…Poor asset quality may diminish banks' overall profitability (Salike & Ao, 2018) or contrarily higher reserves for impaired loans may imply higher profitability through the higher loan rate charged. Following the works of Matemilola, Bany‐Ariffin, Azman‐Saini, and Nassir (2019) and Torgler and Schneider (2007), the aggregated average score for IQ is used. These variables are control of corruption, rule of law, voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality.…”

Section: Methodsmentioning

confidence: 99%

Corporate Sustainability and Financial Performance of Banks in Muslim Economies: The Role of Institutions

Khattak

2020

Journal of Public Affairs

View full text Add to dashboard Cite

Sustainability performance (SP) provides firms with the opportunities that if strategically handled could improve the financial performance of these firms through reputation building. This research aims to investigate the impact of SP on the bank's performance in Muslim countries. This research further investigates the role of institutions in moderating the relationship between SP and the banks' financial performance. It is found that banks with higher SP tend to have better financial performance. Furthermore, the marginal results suggest that the impact of SP is greater for banks in countries with greater institutional quality. These findings are robust to different proxies of financial performance. It is imperative not only to report sustainability practices, but it is equally important to publicize these activities. The sustainable business models would create value for the banks if properly managed and communicated well. This can be made more effective with strong institutions in the country. Moreover, the results are suggesting that banks can enjoy more through contributing to society, doing their part in the equitable distribution of wealth, social justice, and economic wellbeing.

show abstract

Impact of institutional quality on the capital structure of firms in developing countries

Cited by 44 publications

References 53 publications

The ex‐ante Effect of Law and Judicial Efficiency on Borrower Discouragement: An International Evidence

The ex‐ante Effect of Law and Judicial Efficiency on Borrower Discouragement: An International Evidence

Drivers of credit union penetration: An international analysis

Corporate Sustainability and Financial Performance of Banks in Muslim Economies: The Role of Institutions

Contact Info

Product

Resources

About