Determinants Of Capital Structure: Evidence From Ghanaian Small And Medium Enterprises (2016 -2020)

Abstract

This study examines capital structure determinants among Ghanaian SMEs, utilizing mixed-methods research and data gathered through face-to-face interviews from 121 SMEs across 12 regions in Ghana from 2016 to 2020. The primary data were captured and analysed using Stata. The study reveals that managerial ownership, asset structure and stakeholders' cultural backgrounds significantly influence capital structure decisions, with managerial ownership exhibiting the highest marginal impact. However, there was an inverse relationship between profitability, business location and leverage ratio. The study recommends SMEs enhance their physical asset capacity for collateral and promote employee share ownership. This study provides valuable insights for policymakers, SME owners and financial institutions, facilitating informed decisions on capital structure optimization.