Is Debt Structure Relevant for Financial Performance? Evidence from an Emerging Economy

Maksudur Momin Khan, Kanta Chowdhury, Mohammed Ashiqur Rahaman and Mofijul Hoq Masum
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Maksudur Momin Khan: University of Dhaka, Faculty of Business Studies
Kanta Chowdhury: University of Dhaka, Faculty of Business Studies
Mohammed Ashiqur Rahaman: University of Dhaka, Faculty of Business Studies
Mofijul Hoq Masum: United, International University, School of Business Studies

Ekonomski pregled, 2026, vol. 77, issue 2, 122-135

Abstract: Debt financing is a crucial source of funding for modern businesses, yet its relevance varies for companies depending on economic conditions and government policies, influencing the pros and cons associated with it. This empirical study aims to investigate the impact of debt structures on the financial performance of the listed pharmaceuticals and chemicals industry at the Dhaka Stock Exchange, Bangladesh. This study considers the annual reports of twenty listed companies during the period 2013–2022. To explore the relationship between the types of debt structure and corporate performance, a fixed-effect model has been used. The results demonstrate that short-term financing (F_ST), long-term financing (F_LT), and foreign financing (F_FR) positively affect corporate performance—return on equity—whereas private financing (F_PR) and government financing (F_GV) have negative relationships with ROE. The study provides practical insights for businesses, lenders, and policymakers on debt structures. The findings suggest that both short- and long-term financing are important in emerging economies. Specifically, foreign financing positively affects corporate performance by creating synergies, whereas private and government financing fail to produce positive outcomes due to bureaucratic complexity, poor governance, and corruption.

Keywords: Debt Financing; Financial Performance; Dhaka Stock Exchange; Bangladesh. (search for similar items in EconPapers)
JEL-codes: C23 F34 G21 G32 H81 L65 (search for similar items in EconPapers)
Date: 2026
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