The Effect of Profitability and Growth on Micro Small and Medium Enterprise (MSME) Capital Structure with The Size of The Company as a Control Variable

Abstract

MSME is one of the drivers of the economy today. However, limited capital can be a limiting factor for the growth of MSMEs. Errors in decision making regarding the composition of debt will affect business operations. This study aims to examine the effect of profitability and growth on MSME capital structure with company size as a control variable during 2017-2019. With quantitative descriptive methods, this study examines the financial statements of the MSME Lampung Province available at Bank Mandiri Lampung in the 2017-2019 period. Samples that met the criteria of 34 MSME units and were processed using SPSS resulted in the finding that profitability had a nonsignificant positive effect on MSME capital structure and growth had a significant positive effect on MSME capital structure.