Motivated by the recent discovery of a significant increase in corporate debt in developed countries, we use a large sample of 775 listed companies to examine the dynamics and determinants of South African corporate debt. We find an 89% increase in the leverage of the average firm, from 11% in 1990 to 21% in 2015. Long-term and short-term debt increased by 103% and 67%, respectively. We find that this increase is pervasive, and cannot be explained entirely by either firm attributes or macroeconomic factors, despite the importance of the latter. Instead, we find supply-side factors to be the main determinants of the upward trend in corporate debt, highlighting their importance to corporate debt policies in emerging economies.
- Corporate debt, Supply-side factors, Demand-side factors, Financial constraints, Emerging markets.
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
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- School of Social Sciences, Edinburgh Business School - Associate Professor
- School of Social Sciences - Associate Professor
- Research Centres and Themes, Energy Academy - Associate Professor
- Research Centres and Themes, Centre for Finance & Investment - Associate Professor
- Research Centres and Themes, The Spatial Economics and Econometrics Centre - Associate Professor
Person: Academic (Research & Teaching)