Financing of small and medium sized enterprises (SMEs) and the determinants of their capital structure

Abstract

In our study we investigate the determinants of capital structure of the Algerian SMEs using a sample of 50 SME, observed during the period between 2016 and 2019. In order to explain the total-debt ratio (TD) and the short-term debt ratio (STD), we used the Tobit model under panel data as an estimation method for the two models, the results show a significant relationship between profitability, liquidity ,tangibility of assets, size, non-debt tax shield ,age and the SMEs level of leverage ( TD and STD). These results confirm the predictions of the pecking-order theory.