*2.8. The Interest Rate*

The effect of the interest rate on the financing option is certainly not to be neglected, because the costs of external financing reflect the weighted average cost of capital of firms. Increasing the interest rate positively influences the choice of short-term funds, rather than opting for long-term debt. (Bas et al. 2010; Bokpin 2009) obtained a positive but statistically insignificant relationship between the two.
