Abstract:
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ABSTRACT
The primary goal of this study was to evaluate the macroeconomic variables affecting capital
structure of non-financial companies listed on Tanzania's DSE. With this overarching goal in
mind, the study specifically looked at the effects of GDP, inflation rate, and interest rate on the
capital structure of non-financial firms listed on the DSE as well as the relationship between
these three factors and capital structure. The population of the study consisted of non-financial
firms in Tanzania, but the target population was non-financial firms listed on the DSE for the
purpose of the study relating to macroeconomic factors for the period of 7 years between 2015
and 2021. The study used a cross-sectional design supported by a quantitative approach.
Secondary data from the verified and publicly available financial statements of the selected
companies were gathered for this study on both independent and dependent variables.
Regression mode with panel data and descriptive statistics have both been applied. The study
found that the leverage ratio, which measures capital structure, has a negative link with GDP
growth rate. The study found a favorable correlation between the capital structure of non-
financial companies listed on the DSE and the rate of inflation. Nonetheless, the study did
discover a negative correlation between interest rates and the capital structure of non-financial
companies listed on the DSE. It is recommended that policy makers and the government
incentivize more enterprises to register on the Dar es Salaam stock exchange so they can take
use of the different financing options available. There are relatively few companies listed on the
Dar es Salaam stock exchange. In order to reduce agency conflict in the eyes of the firms and
promote additional prospects for investment growth, the government ought to purchase more
shares in DSE listed companies through social security institutions or other channels
