The paper investigates how firms in capital market oriented economies (UK and US) and bank oriented economies (France, Germany, Japan) determine their capital structure. Using panel data and a two-step system-GMM procedure, the study finds that the leverage ratio is positively affected by asset tangibility and firm size, but declines with higher profitability, growth opportunities, and share price performance in both types of economies. Market conditions also influence leverage, with the effectiveness of determinants depending on legal and financial traditions. The results confirm that firms have target leverage ratios, with French firms adjusting fastest and Japanese firms slowest. The capital structure is heavily influenced by the economic environment, corporate governance, tax systems, borrower-lender relationships, and investor protection. The study addresses two major gaps in the literature: the implications of economic financial orientation on capital structure and the role of macroeconomic conditions in financing decisions. It uses a dynamic perspective, incorporating panel data and a two-step system-GMM procedure to analyze the determinants of leverage. The results show similarities and differences in the determinants of capital structures across economies. Firm size has a positive effect on leverage, while profitability and growth opportunities have inverse effects. Asset tangibility, equity premium, and effective tax rate vary across countries, suggesting that institutional arrangements influence capital structure decisions. The findings confirm that lessons from one economy cannot be generalized to others, and that managers consider both firm-specific and market conditions when deciding financing mixes. Firms appear to have target leverage ratios, but the speed of adjustment varies by country, with French firms adjusting fastest and Japanese firms slowest. The study also highlights the role of corporate governance and legal traditions in capital structure decisions, with higher rule of law, ownership concentration, and creditor rights positively affecting leverage. The results confirm that the determinants of capital structure vary across countries due to differences in financial traditions and institutional settings.The paper investigates how firms in capital market oriented economies (UK and US) and bank oriented economies (France, Germany, Japan) determine their capital structure. Using panel data and a two-step system-GMM procedure, the study finds that the leverage ratio is positively affected by asset tangibility and firm size, but declines with higher profitability, growth opportunities, and share price performance in both types of economies. Market conditions also influence leverage, with the effectiveness of determinants depending on legal and financial traditions. The results confirm that firms have target leverage ratios, with French firms adjusting fastest and Japanese firms slowest. The capital structure is heavily influenced by the economic environment, corporate governance, tax systems, borrower-lender relationships, and investor protection. The study addresses two major gaps in the literature: the implications of economic financial orientation on capital structure and the role of macroeconomic conditions in financing decisions. It uses a dynamic perspective, incorporating panel data and a two-step system-GMM procedure to analyze the determinants of leverage. The results show similarities and differences in the determinants of capital structures across economies. Firm size has a positive effect on leverage, while profitability and growth opportunities have inverse effects. Asset tangibility, equity premium, and effective tax rate vary across countries, suggesting that institutional arrangements influence capital structure decisions. The findings confirm that lessons from one economy cannot be generalized to others, and that managers consider both firm-specific and market conditions when deciding financing mixes. Firms appear to have target leverage ratios, but the speed of adjustment varies by country, with French firms adjusting fastest and Japanese firms slowest. The study also highlights the role of corporate governance and legal traditions in capital structure decisions, with higher rule of law, ownership concentration, and creditor rights positively affecting leverage. The results confirm that the determinants of capital structure vary across countries due to differences in financial traditions and institutional settings.