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The Impact of Financial Leverage on Firm Growth: Empirical Evidence from Bosnia & Herzegovina

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  • Jasmina Dzafic

    (University of Zenica, Bosnia & Herzegovina)

  • Nedzad Polic

    (University of Zenica, Bosnia & Herzegovina)

Abstract

Referring to the permanent need for investigation of the corporate finance principles effects on firm growth performance, we present the research of financial leverage effects on firms’ growth in Bosnia and Herzegovina. For that purpose, we collect a sample of 18,007 firms from B&H. The sample includes all firms being active in the period 2008-2016, classified in twelve industries, three size levels and situated in two entities (Federacija BiH and Republika Srpska). Along with the impact investigation, we tend to confront the findings with theoretical expectations and suggest certain incentives policy development if appropriate. We apply Stata 15 throughout the empirical research analysis. The findings of the paper call for comprehensive and decisive response in order to turn potentials of external operations and investments financing into true development supporting tool, instead of being temporary solution to cover loss of assets and imbalanced assets to debt structure as the main findings reveal.

Suggested Citation

  • Jasmina Dzafic & Nedzad Polic, 2019. "The Impact of Financial Leverage on Firm Growth: Empirical Evidence from Bosnia & Herzegovina," Eurasian Journal of Business and Management, Eurasian Publications, vol. 7(1), pages 65-73.
    • Handle: RePEc:ejn:ejbmjr:v:7:y:2019:i:1:p:65-73
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