Impact of Debt Financing on Earnings/Productivity of the Business concern

Abstract

This study investigates the impact of debt financing on the productivity and profitability of businesses in Bangladesh amid an economically challenging environment. The research highlights how high and unstable interest rates have hindered effective capital budgeting, leading to decreased investments and the deterioration of critical infrastructure, particularly in the agricultural sector. It explores the dual nature of debt financing—short-term and long-term—and its role in funding capital projects and meeting working capital requirements. The study emphasizes the significance of financial policy in business growth and the challenges faced by banks in providing long-term loans due to liquidity issues. By analyzing the effects of debt on business operations, the study aims to equip business owners with insights necessary for making informed financial decisions regarding debt utilization and capital structure. Ultimately, it seeks to contribute to the diversification of the economy through enhanced local sales and exports, serving as a valuable resource for future researchers exploring business profitability in Bangladesh.