The determinants of capital structure: A comparison of financial and non-financial firms in a regulated developing country–Nigeria

Isaiah Oino, Ben Ukaegbu

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


– The purpose of this paper is to investigate whether there are differences between the determinants of the capital structure in financial and manufacturing firms and also assess how the speed of adjustment differs.

– This study employed balanced panels data procedure using pooled ordinary least square, the random effects and fixed effects on manufacturing firms and banks that are listed on Nigeria Stock Exchange. The use of the three estimation method is in order to make a meaningful comparison between the models.

– The findings indicate that there are similarities and differences in the capital structure determinants on the two sets of firms: banks tend to be more leveraged when they are more profitable and manufacturing firms tend to be less leveraged when they are profitable. In addition, banks adjust their leverage faster at a speed of 69 per cent than manufacturing firms at 46 per cent. The study also shows that changes in the economy influence the capital structure of financial firms more than that of manufacturing firms.

Research limitations/implications
– The study only focused on one economy.

Practical implications
– As a result of 2008 global financial crisis, there has been intense debate on the significance of regulatory capital. The study demonstrate the need for regulatory capital in banks to be procyclical rather than being static.

– To the best of the knowledge, this is the first paper to empirically test how capital structure differ between banks and non-financial institutions.
Original languageEnglish
Pages (from-to)341-368
Number of pages28
JournalAfrican Journal of Economic and Management Studies
Issue number3
Publication statusPublished - 26 Aug 2014


  • Developing economies
  • Capital regulation
  • Capital structure determinants
  • Financial and non-financial firms


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