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Capital Structure Determinants in German SMEs: Panel Analysis and Policy Recommendations

  1. Journals
  2. Economics, Finance, Business & Management
  3. Credit and Capital Markets – Kredit und Kapital
  4. Vol. 56, Issue 3-4
  5. pp. 313–351

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Shugliashvili, T., Pirveli, E., Munjishvili, T., Deari, F. Capital Structure Determinants in German SMEs: Panel Analysis and Policy Recommendations. Credit and Capital Markets – Kredit und Kapital, 56(3-4), 313-351. https://doi.org/10.3790/ccm.2023.1441801
Shugliashvili, Teona; Pirveli, Erekle; Munjishvili, Tea and Deari, Fitim "Capital Structure Determinants in German SMEs: Panel Analysis and Policy Recommendations" Credit and Capital Markets – Kredit und Kapital 56.3-4, 2023, 313-351. https://doi.org/10.3790/ccm.2023.1441801
Shugliashvili, Teona/Pirveli, Erekle/Munjishvili, Tea/Deari, Fitim (2023): Capital Structure Determinants in German SMEs: Panel Analysis and Policy Recommendations, in: Credit and Capital Markets – Kredit und Kapital, vol. 56, iss. 3-4, 313-351, [online] https://doi.org/10.3790/ccm.2023.1441801
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Capital Structure Determinants in German SMEs: Panel Analysis and Policy Recommendations

Shugliashvili, Teona | Pirveli, Erekle | Munjishvili, Tea | Deari, Fitim

Credit and Capital Markets – Kredit und Kapital, Vol. 56 (2023), Iss. 3-4 : pp. 313–351

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.2023.1441801
Language
English
Pages
39
Keywords

Author Details

Teona Shugliashvili, MBA, Ludwig Maximilian University of Munich, Munich Graduate School of Economics, Akademienstreet. 1/I, 80799, Munich.

Prof. Dr. Erekle Pirveli, Caucasus University, Saakadze Str. 1, Tbilisi 0102, Georgia.

Prof. Dr. Tea Munjishvili, Tbilisi State University, 2, University Street, 0186 Tbilisi, Georgia and Maritime University of Szczecin, Poland.

Assoc. Prof. Dr. Fitim Deari, South East European University, Bul. “Ilindenska” number 335, 1200 Tetovo, Republic of North Macedonia.

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Abstract

This study investigates the financing decisions within German SMEs, examining firm-specific, macroeconomic, and news-related determinants. Utilizing a 10-year dataset encompassing 13,051 SMEs, we employ a dynamic panel data model with an unbiased Dynamic Panel Fractional (DPF) estimator to identify the key variables influencing the debt-to-equity ratio. The findings underscore the importance of factors such as the non-debt tax shield, firm size, interest rate spread, and the economic policy uncertainty index.

The study’s findings propose the following policy implications: 1) Policy initiatives targeting firm size and non-debt tax shields affect SME leverage; 2) Policies addressing the term spread and economic uncertainty influence debt levels across various German industries; 3) Industry-specific SME policies are advisable, due to the significant industry effects on German SME leverage; 4) SME policy incentives yield short-term effects on capital structures, as SMEs adjust leverage within 8 months.

Table of Contents

Section Title Page Action Price
Teona Shugliashvili et al.: Capital Structure Determinants in German SMEs: Panel Analysis and Policy Recommendations 313
Abstract 313
I. Introduction 314
II. Background Literature and Empirical Evidence 316
1. Firm-specific Variables 316
a) Non-debt Tax Shields 316
b) Firm Size 317
2. Macroeconomic Variables and Industry Effects 319
a) Interest Rate Spread 320
b) Economic policy uncertainty index 320
3. Industry Effects 321
III. Data and Methods 322
1. The Data and Description of Variables 322
2. Model and methodology 327
a) Dynamic Panel Fractional (DPF) Estimator 328
IV. Results 330
1. Firm-specific variables 330
2. Macroeconomic effects 340
3. Industry Effects 343
V. Conclusion 345
Online Appendix 346
References 346

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