SMEs capital structure determinants: empirical evidence from Kazakhstan

Abstract

The purpose of this paper is to study the standard firm-factor determinants on capital structure of small and medium-sized enterprises (SMEs). To this end, we analyzed small and medium sized firms in Kazakhstan, where all sectors were considered. We use panel data methods to investigate the determinants of capital structure for non-financial SMEs in Kazakhstan. This study examines the impact of key determinants such as asset tangibility, size, growth, profitability and tax rate of SMEs. The trade-off theory and the pecking order theory of capital structure guided this study. The results suggest that despite some differences in the influence of factors on the capital structure, most of the determinants presented by the theory of finance appear indeed to be relevant for the Kazakhstan small and medium business sector.

Capital Structure and Financial Stability at Non-Ferrous Mettalurgy Enterprises in Kazakhstan

“…Big companies have a better reputation in the debt market to borrow more at lower costs. This statement is confirmed in empirical studies (Demirgüç-Kunt, Martinez Peria, and Tressel 2020; Saif-Alyousfi et al 2020) [7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22][23][24][25].…”

“…Daily firm business transactions affect financial stability and cause it to move from one state to another. According to [5][6][7][8][9][10] the ratio of working capital to inventory and the debt ratio to equity are essential characteristics of financial stability and solvency-their external manifestation. In the sustainable development context, new rules for conducting business are being formed at all economic levels, leading to a revision of the established criteria and measures for managing the capital structure to carry out the desired effect.…”

“…Numerous studies have established different factors correspond or do not correspond to a particular theory. There are factors such as firm size, age, growth, tangible assets, tax shield, and profitability [6][7][8][9][10][11][12][13][14][15][16][17].…”