Working Papers present research work by both Danmarks Nationalbank’s employees and our partners. Working Papers are primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.

Financial stability and financial risks

Corporate capital structure and profitability, productivity and access to finance

We take a closer look at the links between corporate capital structure and productivity, profitability and access to finance based on Danish industry-level and firm-level accounting data from the period 2000-2011. Our results indicate that the capital structure has no significant impact on the firms' profitability or productivity. However, the capital structure is important in relation to the range of financing options available to the firm and its funding and refinancing risks. Our analysis shows that small and medium-sized enterprises with high solvency ratios tend to have a higher acceptance rate when they apply for bank loans than corresponding firms with low solvency ratios. We also find that firms issuing exchange-traded stocks have higher solvency ratios than unquoted public firms. Finally we compare the corporate capital structure in Denmark with other EU countries based on aggregated financial accounts statistics. The overall funding pattern of Danish firms is quite similar to the one found in the other European countries. However, the Danish firms tend to a somewhat lesser extent to use market based funding such as quoted shares and corporate bonds which might reflect a large and well-functioning Danish market for mortgage bonds and the prevalence of industry foundations in Denmark.