Analysis of Firm Capital Structure Decisions: The Case of Non-Banking Firms in Botswana

This study seeks to bridge the knowledge gap by analyzing capital structure decisions of non-banking firms in Botswana. The study also investigates the effects of macroeconomic conditions on firms' investment behavior as measured through their capital structure decisions, with a specific focus on Botswana non-banking firms. This study's focus on non-banking sectors is based on the difficulty in comparing firms in banking sector and those who are not, mainly due to the regulations firms face regarding capital structure. Moreover, since Botswana's diversification efforts are targeted at expanding the economy's productive sectors in order to reduce dependence on the mining sector, the study seeks to focus on the capital structure of the firms in these other sectors. As a consequence, the study looks at the banking sector as part of the sources of capital structure which they provide to firms in the country, hence the exclusion of the commercial banks and the Botswana Stock Exchange as firms in the study. The capital structure decisions of non-banking firms in Botswana are examined using a Two-step Generalized Method of Moments (GMM) which takes into account simultaneity issues in the dataset, as well as through Quantile regression in order to examine the sectors in depth."