Dźwignia wynikająca z finansowania nieodsetkowego – badanie korelacji
Leverage Triggered by Non-interest Bearing Liability – the Correlation Analysis

Summary/Abstract: Purpose – The objective of the paper is to formulate and subsequently to empirically validate a set of research hypotheses describing the relation between the size of non-interest bearing financing and the level and risk of firm’s profitability. Design/methodology/approach – The paper summarizes the original model of the firm together with the leverage equations derived from it. In the empirical section, the simple analysis of the strength and the direction of the relation between the level of non-interest bearing liability on one hand and the level and the volatility of firm’s returns on the other for different firm size (as measured by the number of employees) have been presented. Findings – The analysis of the theoretical model suggests the presence of the positive relation between the size on non-interest bearing financing and the level of firm’s return volatility regardless of the firm size. However, the increased risk does not have to be always rewarded, for small firms in particular. Empirical results, albeit very simple, seem to support theoretical conclusions: in contrast to large firms, smaller firms have lower returns with the increase in non-interest bearing financing. Originality/value – With the help of original firm model and the tools developed for the financial leverage analysis, the paper describes the (non-financial) leverage forces rarely mentioned in the literature. In addition, it presents the introductory empirical evidence on the firm size dependent impact of non-interest bearing liability on the risk and return using a large sample of Polish firms.

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