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Effects of Using Borrowed Capital within the Companies’ Activities

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  • Bogdan-Florin FILIP

    () (Alexandru Ioan Cuza University of Iasi)

Abstract

The paper approaches some aspects regarding the use of the borrowed capital by the companies, in the light of the effects generated by it in relation to their own activity. The treatment of these effects starts from the premise that, beside the effect of increasing the total capital of which the company can dispose by obtaining loans, there are complementary effects such as increasing of costs, financial leverage and financial risk, which are analyzed in terms of the specific implications on the company’s activity. There are taken into consideration some particularities and their implications which come from the formation of the borrowed capital for the company, determined, in principal, by the use of the bank loans, respectively the use of the bond loans, inclusively in relation with the use of equity.

Suggested Citation

  • Bogdan-Florin FILIP, 2012. "Effects of Using Borrowed Capital within the Companies’ Activities," EuroEconomica, Danubius University of Galati, issue 1(31), pages 67-74, February.
  • Handle: RePEc:dug:journl:y:2012:i:1:p:67-74
    as

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    File URL: http://journals.univ-danubius.ro/index.php/euroeconomica/article/view/1172/1071
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    References listed on IDEAS

    as
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    5. Titman, Sheridan & Wessels, Roberto, 1988. " The Determinants of Capital Structure Choice," Journal of Finance, American Finance Association, vol. 43(1), pages 1-19, March.
    6. Wald, John K, 1999. "How Firm Characteristics Affect Capital Structure: An International Comparison," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 22(2), pages 161-187, Summer.
    7. Joshua Abor, 2007. "Debt policy and performance of SMEs: Evidence from Ghanaian and South African firms," Journal of Risk Finance, Emerald Group Publishing, vol. 8(4), pages 364-379, August.
    8. John K. Wald, 1999. "How Firm Characteristics Affect Capital Structure: An International Comparison," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 22(2), pages 161-187, June.
    9. Jensen, Michael C, 1988. "Takeovers: Their Causes and Consequences," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 21-48, Winter.
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