Determinant Factors of Firm Leverage: An Empirical Analysis at Iasi County Level☆

Abstract The paper investigates the determinants of capital structure of micro- and small enterprises based in the county of Iasi in Romania. Our study employed debt ratio as the dependent variable and five factors (profitability, tangibility, liquidity, size, and growth opportunity) as determinants of capital structure. We have found that leverage is negatively related to tangibility, profitability and liquidity. The size of the firm and the growth opportunities can also have a negative impact on the leverage, but to a lower extent.