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Research on Influencing Factors of the Leverage Ratio of Non-financial Enterprises in the GBA

Author

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  • Shihong Zeng
  • Fan Li
  • Zhen Zhong

Abstract

This paper studies the factors influencing the leverage ratio of non-financial enterprises in the Guangdong, Hong Kong and Macao Greater Bay Area (GBA) from 2007 to 2017. On the whole, the leverage ratio of non-financial enterprises in the greater bay area is not high. From the perspective of ownership, state-owned enterprises have a higher leverage ratio than non-state-owned enterprises. The leverage ratio differs significantly across industries. From the regional perspective, before 2008, enterprises in Macao had the lowest leverage ratio, and those in Guangdong had the highest. In recent years, the corporate leverage ratio has tended to be similar among the enterprises in Guangdong, Hong Kong and Macao. Corporate profitability is the most important micro-level factor affecting the leverage ratio, and economic growth has the most significant direct impact on the leverage ratio of non-state-owned enterprises. In addition, the economic growth rate, the M2 growth rate and policy uncertainty have a clear indirect impact on the leverage ratio. Â JEL classification numbers: G11, G24, G34.

Suggested Citation

  • Shihong Zeng & Fan Li & Zhen Zhong, 2022. "Research on Influencing Factors of the Leverage Ratio of Non-financial Enterprises in the GBA," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 12(1), pages 1-7.
    • Handle: RePEc:spt:apfiba:v:12:y:2022:i:1:f:12_1_7
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    References listed on IDEAS

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    1. Li, Larry & Islam, Silvia Z., 2019. "Firm and industry specific determinants of capital structure: Evidence from the Australian market," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 425-437.
    2. Bülent Köksal & Cüneyt Orman, 2015. "Determinants of capital structure: evidence from a major developing economy," Small Business Economics, Springer, vol. 44(2), pages 255-282, February.
    3. Belkhir, Mohamed & Maghyereh, Aktham & Awartani, Basel, 2016. "Institutions and corporate capital structure in the MENA region," Emerging Markets Review, Elsevier, vol. 26(C), pages 99-129.
    4. Bülent, Köksal & Cüneyt, Orman & Arif, Oduncu, 2013. "Determinants of Capital Structure: Evidence from a Major Emerging Market Economy," MPRA Paper 48415, University Library of Munich, Germany.
    5. Halling, Michael & Yu, Jin & Zechner, Josef, 2016. "Leverage dynamics over the business cycle," Journal of Financial Economics, Elsevier, vol. 122(1), pages 21-41.
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    Cited by:

    1. Chong, Terence Tai Leung, 2024. "Economic Prospects of the Development of the Guangdong-Hong Kong-Macao Greater Bay Area: The Competitive Advantages and Importance of the Service Sector," MPRA Paper 120638, University Library of Munich, Germany.

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    More about this item

    Keywords

    Guangdong-Hong Kong-Macao Greater Bay Area; Leverage ratio; Influencing factors; Two-way fixed effects.;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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