Capital structure determinants of Non-Bank Financial Institutions (NBFIs) in Bangladesh

Abstract

This research examines the relative importance of eight factors in the capital structure decisions of Non-bank Financial Institutions in Bangladesh. Existing empirical research on capital structure has largely been confined to developed countries. The papers related to emerging economies usually group several countries together. The Bangladesh Financial Market has been developing at an exponential rate and dedicated research in this field is required. The study utilizes a larger data set in comparison to the earlier studies on Bangladesh and examines additional factors. We used data of 24 firms for the period of 2006-2008 regardless of listing status. The objective of this study is to build on previous studies on the Bangladeshi capital market and model all the important factors affecting capital structure decisions of NBFIs in Bangladesh. It is found that factors such as debt service coverage, liquidity ratio, growth rate, operating leverage, firm size and age of the firm have significant influences on the leverage structure chosen by NBFIs in the Bangladesh context.