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Capital Structure Of Small And Medium-Sized Enterprises In The Republic Of Croatia

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  • Martina Harc

    (Zavod za znanstveni i umjetnički rad Hrvatske akademije znanosti i umjetnosti u Osijeku, Osijek, Hrvatska)

Abstract

The European Commission emphasizes that adequate access to finance is an important determinant of company development, especially for small and medium-sized enterprises that face different financing challenges. Given their economic importance, the choice of financing methods is one of the most important decisions in business operations. The aim of this paper is to analyze the impact of selected variables on the capital structure of small and medium-sized enterprises in Croatia. Clarifying the relationship between capital structure and the analyzed variables can help companies make more effective financial decisions, adapt to changing macroeconomic conditions, and promote stable growth and development. Using the estimator of the generalized method of moments in two steps, a dynamic panel model was estimated for the period from 2008 to 2017. The empirical analysis confirmed that profitability, company size, tangible assets and tax protection positively affect capital structure, while liquidity and growth have a negative statistically significant impact.

Suggested Citation

  • Martina Harc, 2019. "Capital Structure Of Small And Medium-Sized Enterprises In The Republic Of Croatia," Poslovna izvrsnost-Business Excellence, University of Zagreb Faculty of Economics & Business, vol. 13(1), pages 87-101.
    • Handle: RePEc:zag:busexc:v:13:y:2019:i:1:p:87-101
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