Impact of financial liberalisation on capital structure : evidence from the Johannesburg Securities Exchange

Abstract

This study tested the impact of financial liberalisation on a panel of non financial firms listed on the Johannesburg Stock Exchange. Using fixed, random effects and instrumental variable models, it was found that the removal of international sanctions and stock market liberalisation have a significant negative impact on most measures firm leverage. Capital account liberalisation has a direct and significant impact on firm leverage and the impact of domestic financial sector liberalisation on capital structure is weak. Firms increase their debt maturity structure following stock market liberalisation. The effects of financial liberalisation are more pronounced on larger firms.