This review describes interactions between monetary and fiscal policies that affect equilibrium price levels and interest rates by critically surveying theories about (a) optimal anticipated inflation, (b) optimal unanticipated inflation, and (c) conditions that secure a nominal anchor in the...

The process firms use to choose their capital structures is explained by different corporate finance theories in which trade-off and pecking order are the two most popular hypotheses. Testing these two models will help to determine whether a target debt ratio exists, and if so, how rapidly firms...

The seminal Modigliani-Miller (1958) theorem is a cornerstone of corporate finance theory. It provides conditions under which changes in a firm's capital structure do not affect its fundamental value. A recent controversial debate around the relevancy of the Modigliani-Miller theorem regarding...

The capital structure of banks has become the focus of an extended debate among policymakers, regulators and academics. The seminal Modigliani-Miller (1958) theorem is seen as supportive of regulators' drive to require higher equity capital to banks. This raises the question on to what extent...

This paper proposes a probit model to test capital structure theories. It focuses on leverage increasing capital raisings and tests the various competing theories. It is shown that this approach does not have the spurious ratio problem documented by Barraclough (2007) that plague traditional...

I provide further evidence on the determinants of corporate capital structure by estimating a dynamic trade-off model of the firm that includes investment, leverage, and payout decisions. The structural model generates a leverage ratio that oscillates around a long-run, time-invariant level and...

The purpose of this study is to investigate the association between market power and capital structure. This study will further provide a logical explanation towards the factors affecting capital structure. This study analysed 176 non-financial Pakistani companies listed on Karachi Stock...