To discuss remedies for the weak financial structure of Korean firms, an understanding of the various factors determining financial structure must precede. This study first analyzes the financial environment of Korean firms and then seeks to identify the determinants of financial structure through empirical investigation. In the regression analysis, the intercorrelations among explanatory variables were considered from multiple angles. Using financial data from the 1977–88 period for a sample of 128 listed manufacturing firms, the analysis revealed that firms with larger firm size, greater tangible fixed assets, affiliation with chaebol groups, and higher dividend payout ratios exhibited higher debt ratios, while firms with greater profitability and higher recent growth rates exhibited lower debt ratios.