Supply of capital and capital structure: the role of financial development

Konstantinos Koufopoulos, Angelos Antzoulatos, Costas Lambrinoudakis, Emmanuel Tsiritakis

Research output: Contribution to journalArticlepeer-review


We explore the effect of financial development on corporate capital structure and the tightness of financial constraints that firms face. We employ an econometric technique that allows us to explicitly test for convergence in capital structure. This technique increases the power of our statistical tests. In doing so, we identify a group of convergent firms. The driving force of convergence is financial development, which positively affects the firms' leverage ratio. We also identify a group of firms, whose leverage is not affected by financial development, because
they are financially constrained.
Original languageEnglish
Pages (from-to)166-195
Number of pages30
JournalJournal of corporate finance
Early online date30 Jan 2016
Publication statusPublished - Jun 2016

Cite this