Factors Affecting Preference of Short-Term Financial Borrowing: ISE (Istanbul Stock Exchange) Application

Mehmet DEN, Eda ORUC


We tried to determine the relation between short-term financial borrowing levels and various financial indicators of the firms trading on Istanbul Stock Exchange. In our study covering the years of 1994-2007, we used such data for the firms which were traded on Istanbul Stock Exchange in this period uninterruptedly and had short-term financial debts in each of their financial statements for 3 months. We created three separate models in the study we carried out by using panel data analysis method. It was seen based on the results we obtained that there is a significant negative relation between short-term financial debt level and earning before interest and taxes. In addition, it was also found that there is a significant positive relation between short-term financial debts and asset turnover, financial leverage degree and current assets/total assets ratio. It may be construed based on these results that firms use their preferences for borrowing term as a sign of expectation of the firm for its future.

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DOI: https://doi.org/10.5539/ijbm.v5n1p194

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