Relationship between macroeconomic factors and debt structure: evidence from non-financial firms in Nigeria

Abstract

This study investigates how macroeconomic variables affect non-financial enterprises in Nigeria's decision-making regarding their debt structures. The research makes use of secondary information from listed non-financial corporations in Nigeria between 2008 and 2020. A Panel OLS was used in the study to examine the data gathered. The results of the panel regression demonstrate how firm characteristics (firm size, profits, fixed assets, non-debt tax shields), and growth rates of the gross domestic product have an impact on the debt structure of non-financial enterprises in Nigeria. The results indicate that while interest rates have a negative link with debt structure, there is a positive relationship between GDP growth rates, inflation rate and private credit. The study encourages company managers in the sector in Nigeria to take these macroeconomic factors' possible impacts on their funding decisions and their bearing on the sector's overall growth into account when making long-term funding decisions.