Short-term financing practice of mining companies

Using data from Gécamines' partner mining firms, we found that the financial attribute components of financial strength and financial flexibility have an impact on firms' use of short-term debt. Firms with high financial strength use short-term debt while firms with high financial flexibility may not use short-term debt. The study of the determinants of short-term debt has become a hot topic in the financial literature in recent years. We found interesting results about the relationship between the firm's financial strength and short-term debt. Indeed, the firm opts for short-term debt when it has a strong financial strength. The significant results allow us to conclude that short-term debt helps to solve agency problems in mining firms. These results are mainly related to the growth option.