Rising corporate debt and value relevance of supply-side factors in South Africa

Michael Machokoto, Geofry Areneke, Boulis Ibrahim

Research output: Contribution to JournalArticle


Motivated by the recent discovery of a significant increase in corporate debt in developed countries, we use a large sample of 775 listed companies to examine the dynamics and determinants of South African corporate debt. We find an 89% increase in the leverage of the average firm, from 11% in 1990 to 21% in 2015. Long-term and short-term debt increased by 103% and 67%, respectively. We find that this increase is pervasive, and cannot be explained entirely by either firm attributes or macroeconomic factors, despite the importance of the latter. Instead, we find supply-side factors to be the main determinants of the upward trend in corporate debt, highlighting their importance to corporate debt policies in emerging economies.
Original languageEnglish
Pages (from-to)26-37
Number of pages12
JournalJournal of Business Research
Early online date3 Dec 2019
Publication statusPublished - 1 Mar 2020


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