Research Article · Vol. 25, No. 1 (2026) · pp. 23-45
Peer reviewed — at least two external reviewers, single-anonymised. Editorial process
Factors Affecting Financial Leverage: A Study on Capital Structure in Bangladeshi Metal and Cement Industry
- Shakil Ahmed Sabuz — Department of Business Administration, Chandpur Science and Technology University
- Md. Yousuf Harun — Department of Finance and Banking, Jahangirnagar University
Published Jun 30, 2026 · https://doi.org/10.17477/jcea.2026.25.1.023
Abstract
This paper assesses the financial leverage determinant factors regarding firm-specific variables and macroeconomic variables in the Bangladesh metal and cement industry. The usage of RE, FE, bootstrapping, year fixed, and GMM has tried to address endogeneity, heteroskedasticity, and autocorrelation and to provide valid inferences. The results indicate that profitability and firm size positively influence leverage, showing profitable and better access of larger firms to debt finance. Liquidity and risk reduce leverage, reflecting the cautious approach of firms towards financial distress. Growth opportunities have a positive but insignificant influence on leverage, supporting little to no influence on leverage decisions. GDP growth has a positive influence on leverage. However, unexpected positive signs from inflation and interest rates indicate that firms adjust financing policies to the state of the economy. From these findings, there are implications for the optimization of corporate managers and policymakers in capital structure decisions that ensure financial flexibility, adding to financial stability in developing economies and changing economic environments. In general, firm size, macroeconomic factors, and risk remain the most crucial determinants of financial leverage.
Keywords:Determinants of leverageCapital StructureFirm sizeRandom effects modelBangladesh