Research On The Effects Of Interest Rate On Capital Structure In Real Estate Listed Companies

Choosing the optimal capital structure is very important in making the companies'financial policy in market economy. Both micro-economic factors and macroeconomic factors should be considered in choosing the capital structure. The real estate companies which need lots of money, have a long-time constructing period and rely on the loaning from the bank must pay more attention to macroeconomic factors, especially in the effects of interest rates on capital structure. The domestic researches on the effects of interest rate on capital structure in real estate listed companies are still rare, so this paper has a certain theoretical and practical significance.The paper focuses on the effects of interest rate on capital structure in real estate listed companies. Firstly, defines the objects of research on basis of previous research results. Secondly, making theoretical studies, reviewed the theory of interest rate and capital structure. Thirdly, analyses interest rate policy and uses the theory of interest rate to determine the net lending interest rate. And then, analyses the characteristics of real estate listed companies in China.On the basis of status analysis, chooses the index which have important impacts on capital structure as variables. The paper chooses 42 real estate listed companies which got listed before 1997 in Shenzhen and Shanghai Stock Exchange as samples and adopts Panel Data model to do empirical research according to the annual reports for 1997-2006 of samples. The empirical study results showes that: interest rates and capital structure are correlative and interest rates have significant impacts on making capital structure. Finally, the paper puts forward recommendations for the continuing development of the companies.