The determinants of the fixed and floating rate debt: a case for UK non-financial firms.

This thesis attempts to find the determinants of the fixed and floating rate debt mix by using a comprehensive dataset of UK non financial firms. The UK provides a particularly valuable for empirical investigation since it has a large and sophisticated corporate sector. Additionally UK firms have become more exposed to different types of risk because of the increasing level of debts commitments, expanding to international operations. Lack of consensus of the economic effects of the fixed and floating rate debt mix decision as well as the limited research on this issue in the UK intrigued the author and led to this research into whether the UK evidence enhance the theories of capital structure .In this way the thesis contributes to the ongoing debate in the literature and provides a valuable additional case study. The thesis also contributes by giving insights into the determinants of the fixed and floating debt mix across firms over a period of time (1999-2004). One of the main contributions of this study is that the evidence presented suggests that the fixed and floating rate debt are heterogeneous when the determinants of the capital structure is examined. Also firms are mainly hedging when determining the floating rate debt. Firms considering foreign debt and floating rate debt are mainly using foreign currency derivatives to hedge their exchange rate risk. In undertaking this analysis, a systematic empirical approach is taken which employs essentially the econometric methodologies by using the panel data.

A thesis submitted to Middlesex University in partial fulfilment of the requirements for the degree of Doctor of Philosophy.