Abdul Razak Abdul Hadi, Tulus Suryanto


Abstract -This study is driven by the motivation to examine the capital structure determinants for Palestine Stock Exchange (PEX) and Egypt Stock Exchange (EGX). Within the framework of capital structure theories, this study uses Generalized Method of Moments (GMM,1982) as an estimation model employing quarterly panel data analysis during the observed period from 2008 till 2012. The test results from GMM indicate that all the examined determinants have significant relationship with leverage. It has a negative value with liquidity, non-debt tax shield, profitability, size and growth. The Egyptian firms have some uniqueness in its trend. Current assets, debt ratio and liquidity behave positively with leverage except for growth. The other tested determinants in Egyptian companies are found to be not significant. 

Full Text:



Abdulkader M.A. Abdullah (2005), “Capital Structure and Debt Maturity: Evidence from Listed Companies in Saudi Arabia” Journal of Business and Economics, 11, 15-33.

AkthamMaghyereh, (2005), “The Capital Structure Choice and Financial Market Liberalization: A Panel Data Analysis and GMM Estimation in Jordan" Journal of Economics and Management 13, no.1.

Ali, S. and Iman , m. (2013)” The Determinant of capital Structure: Evidence from an Emerging Market”, Journal of Asia Pacific Business Innovation & Technology Management, 003.

Alves, P. Ferreira, and Miguel, A. (2007), “Capital Structure and Law around the World” (march). 14th Annual Conference of the Multinational Finance Society.

Antoniou, A., Guney, Y., and Paudyal, K. (2008), “The Determinants of Capital Structure: Capital Market-Oriented versus Bank-Oriented Institutions” Journal of Financial and Quantitative Analysis, 43 (1), 59-92.

Ang, J.S., Chua, J.H., &McConnel, J.J. (1982), “The Administrative Costs of Corporate Bankruptcy: A Note”, Journal of Finance, Vol. 37, No. 1, 219-226.

Arellano, Manuel, and Stephen Bond. (1991) “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations.” Review of Economic Studies 58, no. 2:277-97.

Azman,S., Ahmad Z. and Siong H., (2010) “ Foreign direct investment, economic freedom and economic growth: International evidence” Journal Economic Modelling, 27 (2010) 1079-1089.

Bennett, M., and Donnelly, R. (1993), “The Determinants of Capital Structure: Some UK Evidence” The British Accounting Review, 25 (1), 43-59.

Blundell, R & Bond, S (1998), 'Initial conditions and moment restrictions in dynamic panel data models', Journal of Econometrics , vol. 87, no. 1, pp. 115-43.

Bolbol, A., and Omran, M. (2004), “Arab Stock Markets and Capital Investment” Arab Monetary Fund, UAE.

Cassar, and Holmes. (2003), “Capital structure and financing of SMEs. Contemporary Approach” University of Pretoria. p 129.

DeAngelo, Harry and Masulis, Ronald W. (1980), “Optimal Capital Structure Under Corporate and Personal Taxation” Journal of Financial Economics, 8 (1), 3-27.

Dinesh Prasad Gajurel (2010), “Capital Structure Management in Nepalese Enterprises”Master’s Degree Thesis, Kathmandu: Faculty of Management, Tribhuvan University.

Easterbrook, F. (1984), “Two-Agency Cost Explanations of Dividends” American Economic Review, 74, 650-659.

Faris M. (2011), “The Determinants Of Capital Structure Of Palestine-Listed Companies” Journal of Risk Finance.226.

Fazzari S.M., Hubbard, R.G., Petersen. (1988), “Financing Constraints and Corporate Investment” Brookings Papers on Economic Activity, 1988 (1), 141-195.

Flannery, M.J., and Rangan K.P., (2006), “Partial Adjustment toward Target Capital Structures” Journal of Financial Economics. 79 (3), 469-506.

Gaud, P., E. Jani, M. Hoesli, and A. Bender, (2005), “The Capital Structure of Swiss Companies: An Empirical Analysis using Dynamic Panel Data” European Financial Management, Vol. 11, pp. 51-69.

Harris, M., and Raviv, A. (1991), “The Theory of Capital Structure” The Journal of Finance. 46, 297-355.

Hsiao, C (1985), 'Benefits and limitations of panel data', Econometrics Review, vol. 46, no. 4, pp. 1251-71.

Huang, S., and Song, F. (2002), “The Determinants of Capital Structure: Evidence from China” Working paper, The University of Hong Kong, pp: 2-7.

HusniKh., and Ali H. (2007), “The Determinants of the Capital Structure: Evidence from Jordanian Industrial Companies” Econ. & Adm., Vol. 24 No. 1, pp: 173-196.

Jalilvand, A & Harris, RS 1984, 'Corporate behavior in adjusting to capital structure and dividend targets: An econometric study', Journal of Finance, vol. 39, no. 1,pp. 127-45.

James H. Scott, Jr. (1977)” Bankruptcy, Secured Debt, and Optimal Capital. Structure” The Journal of Finance Vol. 32, No. 1, Mar., pp. 1-19

Jensen, M. (1986), “Agency Cost of Free Cash Flows, Corporate Finance and Takeovers” American Economic Review, Vol. 76, pp. 323-339.

Joy Pathak. (2009), “What Determines Capital Structure of Listed Firms in India?” Baruch College, City University Of New York, 55 Lexington Ave New York, 10010, United States June: 399-423.

Kadapakkam, P., Kumar, P.C., and Riddick, L.A. (1998), “The Impact of Cash Flows and Firm Size on Investment: The International Evidence” Journal of Banking and Finance. 22(2), 293-320

Khaldoun M. and Mohammad F. (2013)," The Determinants of Capital Structure: Palestinian Case (2003 – 2007) Interdisciplinary Journal of Contemporary Research in Business. 4(12).

Modigliani, F.F., and M. H. Miller. (1963), “Corporation Income Taxes and the Cost of Capital: A Correction” A Mercian E economics review (June).

Modigliani, F.F., and M.H. Miller, (1958), “The Cost of Capital, Corporation Finance, and the Theory of Investment” American Economic Review (June).

Myers, Stewart C., Majluf, Nicholas S. (1984), “Corporate financing and investment decisions when firms have information that investors do not have” Journal of Financial Economics. 13(2), 187–221.

Myers, Stewart.“Determinants of Corporate Borrowing. (1977)” Journal of Financial Economics 5, no. 2: 147-75.

Ozkan, A. (2001), “Determinants of Capital Structure and Adjustment to Long Run Target: Evidence from UK Company Panel Data” Journal of Business Finance and Accounting. 28, 175-198.

Rajan, and Luigi Z. (1995), “What Do We Know about Capital Structure? Some Evidence from International Data” Journal of Finance. 50 (5), 1421-1460.

S. Gureharan, (2010), “A Review of Optimal Capital Structure Determinant of Selected ASEAN Countries” Accounting & Audit Department, University of Malaya, Malaysia 2010.

Samuel, G. (2000), “The Determinants of Capital Structure: Evidence from China” School of Economics and Finance and Centre for China Financial Research (CCFR).

Sheridan, T., and Roberto, W. (1988), “The Determinants of Capital Structure Choice” Journal of Finance. 43(1), 1-19.

Suryanto, T., & Abdul Hadi, A. R. (2015). Capital market integration: Palestine and Israeli experience. Al-Iqtishad: Journal of Islamic Economics, 7(2), 197-206.

Titman, S., and R. Wessels, (1988), “The Determinants of Capital Structure Choice” Journal of Finance. 43, 1-19.

Wijst Van der, N., and Thurik, R. (1993), “Determinants of Small Firm Debt Ratios: An Analysis of Retail Panel Data” Small Business Economics, vol. 5, no. 1, pp. 55-65.


Article Metrics

Abstract views : 881 | PDF downloads : 736


  • There are currently no refbacks.



More archive, citation & indexing...

IKONOMIKA is a Journal of Islamic Economics and Business, Published by the Faculty of Islamic Economics and Business at UIN RadenIntan Lampung - Indonesia. ( This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.