This study tests the explanatory power of the pecking order theory (POT) in shaping the financing decisions of non-financial firms listed on the Palestine Exchange (PEX), an under-researched, politically unstable emerging market. Using panel data for 29 firms over the period 2005–2019, we examine whether debt issuance is primarily driven by financial deficits and whether this relationship outweighs the influence of conventional capital structure determinants. Three empirical models are estimated: (1) testing the direct link between net debt issuance and financial deficit; (2) assessing whether financial deficit crowds out the explanatory power of firm-specific variables; and (3) examining leverage determinants consistent with POT predictions. Panel least squares serves as the primary estimation method, with robustness confirmed through fixed effects, random effects, lagged specifications, and GMM system …

Title

International Review of Economics

Publisher

Springer

Publisher Country

United States of America

Indexing

Scopus

Impact Factor

1.0

Publication Type

Both (Printed and Online)

Volume

72

Year

2025

Pages

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