Exploring capital structure and financial sustainability: A comprehensive systematic review

Abstract

This paper presents a comprehensive systematic review of the existing literature on capital structure and financial sustainability, aiming to synthesize key theoretical perspectives, methodologies, and empirical findings in this evolving research domain. Guided by the PRISMA protocol, a rigorous selection process was conducted across multiple academic databases, resulting in the inclusion of ten peer-reviewed studies published between 2015 and 2024. The review reveals a growing interdisciplinary integration of financial theories such as capital structure theory, financial sustainability theory, and financial performance models with sustainability-oriented frameworks, including the UN Sustainable Development Goals (SDGs), ESG framework, and Maqasid al-Shari’ah. Methodologically, the studies employed both qualitative, quantitative approaches, literature analysis, and mixed method.  Theoretical plurality is evident, with most studies utilizing one to two frameworks, highlighting the complexity of addressing financial sustainability in diverse economic and institutional contexts. It is important to note that there is a regional research bias, as developed economies such as the United States make fewer contributions. This is likely due to the fact that their policy imperatives and research priorities differ. The findings underscore the need for more integrated, context-sensitive research that bridges financial decision-making with long-term sustainability goals. This review contributes to the literature by mapping current trends, identifying research gaps, and offering directions for future studies. It advocates for a broader adoption of hybrid theoretical models and cross-regional analyses to better understand the interplay between capital structure choices and sustainable financial outcomes in an increasingly complex global environment.