Finance and Credit

Abstracting and Indexing

Referativny Zhurnal VINITI RAS
LCCN Permalink
Google Scholar

Online available



Cyberleninka (12 month OA embargo)

Modeling the optimal capital structure of industrial enterprises in Russia during the crisis

Vol. 25, Iss. 6, JUNE 2019

Received: 15 May 2019

Received in revised form: 29 May 2019

Accepted: 12 June 2019

Available online: 28 June 2019


JEL Classification: C50, F23, G32, L60, O14

Pages: 1297–1313

Spitsyn V.V. National Research Tomsk Polytechnic University (TPU), Tomsk, Russian Federation

Subject The article addresses the issue of increasing the profitability of industrial enterprises through effective management of capital structure.
Objectives The study determines the optimal capital structure and models how it influences the profitability of Russia's industrial enterprises by ownership form, considering the instability of economic situation and national currency.
Methods I study enterprises operating in the leading process manufacturing sector of Russia, which have the Russian, foreign and mixed owners. The sample comprises 3,160 enterprises for 2012–2016. Based on fixed effects regression models, I determine the optimal share of borrowings reflecting the capital structure, and model its impact on net return on assets. I calculate the optimal share of borrowings using the quadratic function.
Results The article confirms that there can be found the optimal capital structure for each of the three ownership forms and opportunities for raising net return on assets of the capital stricture is effectively managed. A decrease in the national currency exchange rate is found to increase the optimal share of borrowings in the balance sheet, while an increase demonstrates the opposite trend. A considerable part of enterprises have the ineffective capital structure, thus lowering the profitability.
Conclusions and Relevance Owners of most Russian enterprises should try to reduce the share of borrowings. As part of its regulatory involvement, the government should undertake initiatives for decreasing interest rates on corporate loans, stimulating the development of other financial sources (in particular, the development of the stock market) and maintain the stable exchange rate of the national currency.

Keywords: capital structure, optimization, net return on assets, regression analysis


  1. Thi Phuong Vy Le, Thi Bicj Nguyet Phan. Capital Structure and Firm Performance: Empirical Evidence from a Small Transition Country. Research in International Business and Finance, 2017, vol. 42, pp. 710–726. URL: Link
  2. Jarallah S., Saleh A.S., Salim R. Examining Pecking Order Versus Trade-off Theories of Capital Structure: New Evidence from Japanese Firms. International Journal of Finance & Economics, 2019, vol. 24, iss. 1, pp. 204–211. URL: Link
  3. Likhutin P.N., Savchenko A.A. [Determination of essential factors in decomposition of return on equity]. Vestnik NSUEM, 2017, no. 1, pp. 146–161. (In Russ.)
  4. Sukhova L.F. [New factors of enterprise capital profitability management]. Finansovaya analitika: problemy i resheniya = Financial Analytics: Science and Experience, 2015, no. 6, pp. 2–12. URL: Link (In Russ.)
  5. Spitsyn V.V., Trifonov A.Yu., Ryzhkova M.V., Spitsyna L.Yu. [Profitability of chemical industry enterprises in the turbulent economy: Modeling by form of ownership]. Ekonomicheskii analiz: teoriya i praktika = Economic Analysis: Theory and Practice, 2018, vol. 17, no. 9, pp. 1604–1621. (In Russ.) URL: Link
  6. Jain S., Bhargava A., Bhargava A. Impact of Capital Structure on Profitability of Indian Manufacturing Firms. Asian Journal of Research in Banking and Finance, 2017, vol. 7, iss. 7, pp. 299–306. URL: Link
  7. Mukhacheva A.V., Gadzhigasanova N.S., Kuznetsova T.A. [Managing the capital structure of the largest Russian coal-mining enterprises in Russia]. Ekonomicheskii analiz: teoriya i praktika = Economic Analysis: Theory and Practice, 2019, vol. 18, no. 2, pp. 353–367. (In Russ.) URL: Link
  8. Kolotova N.S., Starkova O.S. Statistical Modelling as a Tool to Optimizing the Capital Structure. Journal of Computational and Engineering Mathematics, 2018, vol. 5, no. 2, pp. 70–76. URL: Link
  9. Negasa T. The Effect of Capital Structure on Firms' Profitability (Evidenced from Ethiopian). Preprints, 2016. URL: Link
  10. Ajibolade S.O., Sankay O.C. Working Capital Management and Financing Decision: Synergetic Effect on Corporate Profitability. International Journal of Management, Economics and Social Sciences, 2013, vol. 2, iss. 4, pp. 233–251. URL: Link
  11. Chatterjee S. The Impact of Working Capital on the Profitability: Evidence from the Indian Firms. URL: Link
  12. Sial M.S., Chaudhry A. Relationship between Working Capital Management and Firm Profitability: Manufacturing Sector of Pakistan. URL: Link
  13. Nguyen Tra Ngoc Vy. Does Profitability affect Debt Ratio? Evidence from Vietnam Listed Firms. Journal of Finance & Economics Research, 2016, vol. 1, iss. 2, pp. 87–100. URL: Link
  14. Khan M.I. Capital Structure, Equity Ownership and Firm Performance: Evidence from India. URL: Link
  15. Margaritis D., Psillaki M. Capital Structure, Equity Ownership and Firm Performance. Journal of Banking & Finance, 2010, vol. 34, iss. 3, pp. 621–632. URL: Link
  16. Marquardt D. You Should Standardize the Predictor Variables in Your Regression Models. Journal of the American Statistical Association, 1980, vol. 75, iss. 369, pp. 87–91. URL: Link
  17. Ai C., You J., Zhou Y. Estimation of Fixed Effects Panel Data Partially Linear Additive Regression Models. The Econometrics Journal, 2014, vol. 17, iss. 1, pp. 83–106. URL: Link
  18. Vithessonthi C., Tongurai J. The Effect of Firm Size on the Leverage–Performance Relationship during the Financial Crisis of 2007–2009. Journal of Multinational Financial Management, 2015, vol. 29, pp. 1–29. URL: Link

View all articles of issue


ISSN 2311-8709 (Online)
ISSN 2071-4688 (Print)

Journal current issue

Vol. 25, Iss. 9
September 2019