EconPapers    
Economics at your fingertips  
 

Do financial crises alter the dynamics of corporate capital structure? Evidence from GCC countries

Rami Zeitun, Akram Temimi and Karim Mimouni

The Quarterly Review of Economics and Finance, 2017, vol. 63, issue C, 21-33

Abstract: We study the impact of the 2008 financial crisis on the capital structure of GCC firms. We employ a dataset covering a 10-year period from eight sectors to investigate patterns in corporate leverage before and after the crisis and identify changes in debt financing. Our results indicate that leverage ratios were negatively and significantly impacted by the 2008 crisis due to lack of debt supply by lenders. We also find that the demand for debt by firms is the main driver of leverage before the crisis whereas the demand for debt by firms and the supply of debt by lenders are both important determinants of leverage after the crisis. Moreover, we find that firms adjust their leverage ratios toward the target leverage much slower after the crisis. Our results also indicate that the impact of the crisis on the capital structure is different across industries and across countries. These results are of paramount importance for stakeholders to understand and mitigate the impact of crises on capital structure.

Keywords: Dynamic capital structure; Crisis; Debt demand; Debt supply (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S106297691630028X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:quaeco:v:63:y:2017:i:c:p:21-33

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2017-05-12
Handle: RePEc:eee:quaeco:v:63:y:2017:i:c:p:21-33