South African Journal of Economic and Management Sciences
On-line version ISSN 1015-8812
CHIPETA, Chimwemwe; WOLMARANS, Hendrik P and VERMAAK, Frans NS. Financial liberalisation and the dynamics of firm leverage in a transitional economy: evidence from South Africa. S. Afr. j. econ. manag. sci. [online]. 2012, vol.15, n.2, pp. 171-189. ISSN 1015-8812.
This paper examines the dynamics of corporate capital structures for listed non-financial firms in South Africa. The dynamic models of capital structure have been utilised to document several findings of empirical significance. First, transaction costs reduce dramatically in the post liberalisation regime, and the associated speed of adjustment is more pronounced, and statistically significant for the post liberalisation epoch. Second, financial liberalisation has a significant impact on the capital structure speed of adjustment. Third, the results confirm most of the theoretical predictions of capital structure theories; however, the relationship is more significant in the post liberalised regime. Finally, new evidence has been revealed on what determines the debt maturity structure of firms in a transitional economy.
Keywords : financial liberalisation; leverage; GMM.