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Applied Mathematics & Information Sciences

Author Country (or Countries)

Tunisia

Abstract

We propose the GMM model to analyze the link between the quality of institutions and capital structure in the MENA region for the period 2000 - 2017 of 442 listed companies from ten selected countries. We demonstrate that, with an active and well-developed financial market, it is easier for companies to increase long-term capital and improve companies’ access to long-term debt. By testing the impact of institutional quality, and financial development on capital structure, empirical results show that improving the quality of institutions, strengthening institutional infrastructure can promote the development of finance. We analysed then the mediating effect between leverage and growth opportunities, we notice that the cross effect is insignificant and positive at the same time. Indeed, the effect of debt overcomes the effect of growth opportunities .Lastly, we analyze the existence of a non-linear relationship between the size of the company and the maturity of the debt , Results show that there is a non-linear relationship between the size and the maturity of the debt. In other words, there is a certain value at which the relationship between company size and debt maturity becomes negative.

Digital Object Identifier (DOI)

http://dx.doi.org/10.18576/amis/160203

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