【正文】 these issues either in developing countries or among small firms A review of empirical studies on the capital structure of SMEs helped us to identify some key issues. Not all determinants are consistent with those predictions advanced by theories of finance. Indeed, there are some contrary results on the relationship between some determinants and capital structure among firms in some countries In addition, the firm characteristics are often at the centre in most empirical studies, while the effects of managers’ behaviour have seldom been examined. In a qualitative piece of research, Michaelas, Chittenden, and Pitziouris (1998) argued that owners’ behaviour, in conjunction with internal and external factors, will determine capital structure decisions. This requires further quantitative studies to examine what factors influence capital structure in the small business sector in developing countries. Based on such gaps in the existing literature, this paper attempts to study features of the capital structure of Vietnamese SMEs, over the period 1998–2020, and examine the influence of specific determinants on SMEs’ capital structure. This study has bined data from financial statements and questionnaires given to SMEs’ financial managers to explore how Vietnamese SMEs finance their operations. The study examines such determinants as growth, tangibility, business risk, profitability, size, ownership, relationship with banks, and working on three measures of capital structure. 2 Literature Review and Hypotheses Capital structure is defined as the relative amount of debt and equity used to finance a firm. Theories explaining capital structure and the variation of debt ratios across firms range from the irrelevance of capital structure, proposed by Modigliani and Miller (1958), to a host of relevance theories. If leverage can increase a firm’s value in the MM tax model (Modigliani and Miller 1963。 Huang and Song 2020。 Myers 1984) state that there is no well defined target debt ratio. The latter model suggests that there tends to be a hierarchy in firms’ preferences for financing: first using internally available funds, followed by debt, and finally external equity. These theories identify a large number of attributes influencing a firm’s capital structure. Although the theories have not considered firm size, this section will attempt to apply the theories of capital structure in the small business sector, and 10 develop testable hypotheses that examine the determinants of capital structure in Vietnamese SMEs. Firm Growth We think that this proposition is more relevant in the context of the small business sector in Vietnam, where there was a scarcity of longterm credits in the period 1998–2020 (ADB 2020). In addition, as most SMEs in Vietnam operate in the trading and service sectors, demand for new investment in fixed assets are relatively low. Doanh and Pentley (1999) also argued that Vietnamese SMEs often look for shortterm bank loans or other resources from relatives, friends or suppliers to finance their operations. Taking percentage change in total assets as a measure of firm’s growth, we hypothesize that:A firm’s growth will be positively related to debt ratios. Business Risk According to the theory of financial distress, higher business risk increases the probability of financial distress, so firms have to trade off between tax benefits and bankruptcy costs. Thus, it predicts a negative relationship between business risk and leverage. In the context of the small business sector, Queen and Roll (1987) argue that SMEs are likely to have a higher level of business risk, relative to large firms. Therefore, we propose the hypothesis:Business risk will be negatively related to debt ratios. 2. 3 Firm Ownership The role of state ownership is still a controversial topic in Vietnam’s reform process. As noted above, the Vietnamese financial system is characterized by a bankbased system where SOCBs1 dominate and provide the bulk of loans in the economy (ADB 2020). Soo (1999) also pointed out that most SOCB credits are channeled to SOEs. It can be validly argued that stateowned SMEs have their own advantages over private SMEs in accessing credit from SOCBs. The plausible explanation for this argument is that stateowned SMEs have longlasting ties with mercial banks from the prereform era. Because they are stateowned, SOCBs’ policies favour the state business sector, as pared to the private business sector, notably in terms of interest rates, banking procedures, and collateral requirements. Therefore, it could be expected that stateowned SMEs have more opportunities to access bank loans. Based on this argument, we hypothesize that: Stateowned SMEs will employ more debt than private SMEs. 11 Firm Size Many studies suggest that there is a positive relationship between leverage and size. Marsh (1982) finds that large firms more often choose longterm debt, while small firms choose shortterm debt. Large firms may be able to take advantage of economies of scale in issuing longterm