scholarly journals CAPITAL STRUCTURE AS DETERMINANT OF FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN ETHIOPIA (A CASE STUDY ON PRIVATE BANKS IN ETHIOPIA)

2021 ◽  
Vol 9 (03) ◽  
pp. 216-231
Author(s):  
Taddesse Shiferaw Deneke ◽  
◽  
Tripti Gujral ◽  
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Commercial Banks ◽  
Empirical Relationship ◽  
Asset Return ◽  
Return On Equity ◽  
Net Profit ◽  
Return On Capital ◽  
The Impact ◽  
The Capital Structure

A lot of studies have actually been done by numerous researchers both in developed and developing countries such as Ethiopia to ascertain the empirical relationship existing between capital structure and firm performance with varying samples and period as well as application of several and divergent statistical estimation. This study is based on the identification of the impact that capital structure have on the financial performance of commercial banks in Ethiopia. In this regard, secondary data is collected from varied sources especially annual reports of the private commercial banks in Ethiopia. The literature review is done in the report, and it is identified operating, and the capital structure heavily affects net profit. Apart from this, return on equity, asset and capitals employed also affected by the capital structure of the banks. Regression analysis and descriptive analysis tools are used to analyse the data that is related to the sixteenprivate commercial banks in Ethiopia. On analysis of data, it is identified that operating and net profit is heavily affected by the capital structure. However, in the case of return on asset, return on equity, and return on capital employed, such kind of relationship is not observed. Thus, it is concluded on the basis of entire work that capital structure have the huge impact on the operating and net profit, but it does not put any large impact on the return on asset, return on equity and return on capital employed. The study recommended that banks follow a specific policy, in order to maintain a balance in the capital structure. It is also recommended that managers must keep a keen eye on the changes that are taking place in the capital structure.

scholarly journals The Impact of Capital Structure on the Financial Performance of the Jordanian Industrial Companies Listed on the Amman Stock Exchange for the Period 2012-2015

2018 ◽  
Vol 9 (2) ◽  
pp. 369
Author(s):  
Shireen Mahmoud AlAli
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Stock Exchange ◽  
Return On Assets ◽  
Return On Equity ◽  
Industrial Companies ◽  
Earnings Per Share ◽  
Amman Stock Exchange ◽  
The Impact ◽  
The Capital Structure

The purpose of this study was to identify the effect of the capital structure as a percentage of total liabilities to total assets on the financial performance of the Jordanian industrial companies listed on the Amman Stock Exchange for the period 2012-2015.The study population included all the Jordanian general industrial companies listed on the Amman Stock Exchange. The sample of the study included 10 industrial companies listed on the Amman Stock Exchange. The linear regression analysis was used to test the relationship between variables using the ordinary least squares method (OLS).The results showed that there is a positive significant impact on the capital structure of the industrial shareholding companies listed in the Amman Stock Exchange as measured by the ratio of equity to total assets, return on equity and return on assets and net earnings per share as an indicator of financial performance.The results also showed a negative significant impact on the capital structure of industrial shareholding companies listed on the Amman Stock Exchange as measured by total liabilities to total assets, return on equity and return on assets as an indicator of financial performance, and net earnings per share as an indicator of the financial performance indicators.

scholarly journals The Impact of Capital Structure on Jordanian Banks Performance

2021 ◽  
Vol 10 (1) ◽  
pp. 35
Author(s):  
Rania Al Omari
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Commercial Banks ◽  
Return On Investment ◽  
Stock Exchange ◽  
Return On Assets ◽  
Return On Equity ◽  
Total Debt ◽  
Amman Stock Exchange ◽  
The Impact

Due to the great importance of the financing structure of banks, the impact of capital structure on the financial performance of banks listed on the Amman Stock Exchange has been examined. To achieve the objectives of this study, we have followed the experimental approach. The study relied on financial variables. The Capital Structure has been measured by the ratios of total debt to total assets and total debt to total equity. Both ratios are independent variables. The dependent variable in this study is the financial performance of banks represented by the ratio of return on assets, the ratio of return on equity, the ratio of return on investment, and the ratio of return on share. The study community and sample consisted of twelve commercial banks listed on Amman Stock Exchange (ASE) during the period (2007-2017). Statistical Package for the Social Sciences (SPSS) software was used in testing of research hypotheses. The most important results are that the capital structure has an impact on return on assets (ROA), while it has no impact on return on equity (ROE), return on investment (ROI) and earnings per share (EPS) in Jordanian commercial banks.

scholarly journals Analisis Struktur Modal dan Laba pada Perusahaan Umum Air Minum Daerah (Perumda) Tirta Mangkaluku Kota Palopo Tahun 2016 - 2020

2021 ◽  
Vol 4 (2) ◽  
pp. 234
Author(s):  
Renaldi Renaldi ◽  
Suryati Suryati
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Profit Rate ◽  
Return On Equity ◽  
The Impact ◽  
The Capital Structure

AbstrakStruktur modal dikatakan optimal bilamana dapat meminimumkan biaya modal rata-rata tertimbang (Weighted Avarage Cost of Capital) dan memaksimumkan Return On Equity (ROE). Disamping itu akan tergambar apakah struktur modal tersebut menghasilkan Lavarage yang positif yaitu suatu kondisi dimana Rentabilitas Ekonomi lebih besar dari biaya modal rata-rata tertimbang. Penelitian yang dilakukan pada Perusahaan Umum Air Minum Daerah Tirta Mangkaluku Kota Palopo untuk menganalisis pengaruh struktur modal terhadap biaya modal yang ditimbulkan, menganalisis berapa besar proporsi modal pinjaman jangka panjang pada beberapa alternatif struktur modal (2016 – 2020) dan menganalisis tingkat laba yang diperoleh perusahaan pada setiap alternatif struktur modal tersebut. Hasil penelitian menunjukkan bahwa struktur modal pada perusahaan ini khususnya tahun 2019 dan 2020, sudah optimal dimana Return On Equity (ROE) setelah hutang jangka panjang adalah 1,45% (2019) dan 1,60% (2020) yang lebih besar dari biaya modal rata-rata tertimbang yaitu 0,50% (2019) dan 0,37% (2020). Selain hal diatas, Struktur modal tersebut juga telah menghasilkan Leverage positif dimana secara rata-rata Rentabilitas Ekonomi diangka 1,52% jauh lebih besar dari rata-rata biaya modal rata-rata tertimbang yaitu sebesar 0,60%. Dengan mempertahankan komposisi struktur modal yang ada atau mengembangkan pada komposisi yang lebih baik, maka semakin menjamin kontribusi dari laba Perusahaan Umum Air Minum Daerah Tirta Mangkaluku kepada Pendapatan Asli Daerah (PAD) kota Palopo. Kata Kunci : Biaya Modal, Kinerja Keuangan, Struktur ModalAbstractThe optimization of capital Structure can happen if there's a condition where the Weighted Average Cost of Capital can be minimized and the Return of Equity (ROE) is maximized. The result will tell whether the capital structure can bring out the positive leverage or not. The positive leverage is a condition where economic rentability is bigger than the Weighted Average Cost of Capital. The purpose of the research on Mangkaluku Municipal Waterwork in Palopo City are to analyze the impact of capital structure toward the capital cost, to analyze the proportion of long-term capital loan on some alternatives of capital structure from 2016 to 2020 and to analyze the profit rate that is gained by the company on those alternatives of capital structure. The result of this study is showing that the capital structure rate of this company, especially in 2019 until 2020 shows the optimization of Return of equity (ROE) in this company after the long-term debt. The Return of Equity (ROE) in 2019 and 2020 reached 1,45% and 1,60%. The number is bigger than the Weighted Average Cost of Capital  as much of 0,50% in 2019 and 0,37% in 2020. Besides, that structure modal has resulted in positive levarage, where the average of economic rentability is 1,52%, which is 0,60% bigger than the Weighted Average Cost of Capital. By maintaining the existing modal structure composition or to develop the better composition, it will secure the profit contribution in the company of Mangkaluku Municipal Waterpark toward the locally-generated revenue of Palopo City. Keyword: Capital Structure Analisys, Cost of Capital, Financial Performance

scholarly journals The Impact of the Financial Performance on Capital Structure of Insurance Industry in Egypt

2021 ◽  
Vol 14 (7) ◽  
pp. 103
Author(s):  
Salah Mohamed Eladly
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Significant Relationship ◽  
Return On Investment ◽  
Insurance Industry ◽  
Panel Data Analysis ◽  
Return On Equity ◽  
Study Results ◽  
The Impact ◽  
The Capital Structure

This paper attempts to investigate the impact of the profitability and liquidity on capital structure of insurance industry in Egypt as applied on a sample of (19) insurance firms represented in the Egyptian insurance industry over the period from 1999-2019. The capital structure is measured by debt ratio, and the financial performance is measured by (liquidity, return on equity, and retune on investment).The study results show that there are significant negative linear relationships between the independent variable in terms of return on equity (X1), return on investment (X3), and dependent variable for the capital structure (Y) at the level of significant less than (0.001); based on panel data analysis, the results show that Tau-statistic, and z-statistic, are at a significant level less than (0.05).The statistical conclusion is the null significant relationship between the capital structure and liquidity, while there is a significant relationship between the capital structure, return on equity, and return on investment. The results  also show that the R2 for the independent variables are accepted in the model (capital structure Y, lag Y1, return on equity X1, liquidity X2, and return on investment) by (79.3%) from total variation of capital structure (Y).

Can Capital Structure Affect the Financial Performance of Banks in Turkey?

2018 ◽  
Author(s):  
Merve Tuncay
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Control Variables ◽  
Return On Equity ◽  
Independent Variables ◽  
Earnings Per Share ◽  
Asset Quality ◽  
The Capital Structure

<p>The aim of this study is to investigate the determinants of banks’ financial performance in terms of the capital structure. Annual financial statements of 11 banks traded in Borsa Istanbul are employed for the period of 2006-2016. Return on assets, return on equity and earnings per share are chosen for financial performance measures. The independent variables related to the capital structure are capital adequacy, equity-to-asset, and financial leverage ratios. In addition, macroeconomic variables and bank-specific variables are also considered as control variables for the analysis. The data are analyzed by the panel data regression analysis as it provides more informative finding and less multicollinearity among variables than time series and cross-sectional analyzes.</p><p>The Hausman test results indicate that the random effects model is appropriate for the whole dependent variables. According to the findings; while equity-to-asset ratio affects return on assets positively, amongst the control variables specific to firms, firm size, asset quality and asset growth variables have significant effects on return on assets. It is found no significant effect of independent variables on return on equity, however, it is seen that asset quality has a negative and significant effect. Inflation and interest rates have a significant effect on both variables. Finally, it is seen that equity-to-asset ratio has a positive and significant effect on earnings per share. Only the effect of asset quality on earnings per share is found to be significant among the control variables. Findings of the study are consistent with the previous studies. In addition, the M&amp;M views are not supported by the findings related to return on assets and earnings per share but the return on equity.</p>

scholarly journals Effect of COVID-19 on Dupont based financial performance of three Nationalized Petroleum Companies in India

YMER Digital ◽  
2021 ◽  
Vol 20 (10) ◽  
pp. 44-48
Author(s):  
Mukund S ◽  
◽  
Dr.N Arunsankar ◽  
Keyword(s):  
Financial Performance ◽  
Investment Decision ◽  
Profit Maximization ◽  
Good Tool ◽  
Return On Equity ◽  
Wealth Maximization ◽  
Dupont Analysis ◽  
Return On Capital ◽  
Petroleum Company ◽  
The Impact

: Every company has two major objectives in terms of profitability. i.e. Profit Maximization and Shareholders’ Wealth Maximization. Ratio analysis is a good tool which fosters the utilization of company figures to make proper investment decision for various classes of investors and management for taking right decisions at right time. ROE (Return on Equity) comes into the picture in terms of measuring the wealth maximization. It is basically a composition of ROCE or Return on Capital Employed. American paint manufacturing company named DuPont invented DuPont model of ROE analysis. It basically talks about the key factors contributing the return on equity. It can be used to analyze the return in any industry. In this study, we studied the impact of COVID-19 pandemic in their financial performance using DuPont analysis of the three Nationalized Petroleum company including BPCL, HPCL & Indian Oil Corporation.

scholarly journals Financial Performance, Exchange Rate, and Firm Value: The Indonesian Public Companies Case

2020 ◽  
Vol 11 (22) ◽  
pp. 348-366
Author(s):  
Yulita Setiawanta ◽  
Dwiarso Utomo ◽  
Imam Ghozali ◽  
Jumanto Jumanto
Keyword(s):  
Exchange Rate ◽  
Capital Structure ◽  
Financial Performance ◽  
Firm Value ◽  
Market Value ◽  
Observation Data ◽  
Moderation Effect ◽  
The Exchange Rate ◽  
The Impact ◽  
The Capital Structure

Transactions between countries require a stable exchange rate. When the exchange rate of the country experiences uncertainty, then this will influence the company’s financial performance and even affect the company’s market value. This study aims to look for the direct influence of the company’s financial performance as an independent variable and the firm value as a dependent variable within the investor perspective, also including the exchange rate factor as a moderating variable. Investors could probably learn about information on the ups-and-downs of the Indonesian rupiah against foreign currencies before their investment decisions, even though financial performance substantially influences the company’s market value. The sample in this study was 50 companies within four years of observation. Data processing was carried out by the Eviews statistical application. The results showed that the financial performance, which is proxied by the capital structure, affects firm value, but not profitability. The impact of exchange rate moderation also occurs in the relationship of capital structure and firm value, while the moderation effect on profitability and firm value is not proven. This study provides information that exchange rates influence investment interests upon investors’ analysis of the financial performance of the capital structure, but not profitability.

The impact of environmental performance on capital structure and firm performance: the case of Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ismail Kalash
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Stock Returns ◽  
Environmental Performance ◽  
Positive Impact ◽  
Stock Exchange ◽  
Ordinary Least Squares ◽  
Content Type ◽  
The Impact ◽  
The Capital Structure

Purpose The purpose of this study is to investigate the effect of environmental performance on the capital structure and financial performance of Turkish listed firms. Design/methodology/approach This study used data of 49 firms listed on Istanbul Stock Exchange during the period between 2014 and 2019, resulting in 205 firm-year observations. The environmental performance data were drawn from the carbon disclosure project Turkey climate change reports. Ordinary least squares and binary logistic regression models were used to examine whether environmental performance impacts the capital structure and financial performance. Findings The findings of this research revealed that environmental performance significantly positively affects the firm leverage. Findings also showed that environmental performance has a significantly positive impact on return on assets, operating profitability and return on equity, but no significant impact on stock returns. Practical implications Given the increased borrowing costs for Turkish firms after the 2018 currency crisis in Turkey, the findings of this study are very important as they enable managers of Turkish firms to make better decisions related to capital structure and to understand the role of environmental performance in reducing the cost of debt and enhancing financial performance. Originality/value To the author’s knowledge, this research is the first to investigate the effect of environmental performance on capital structure in the Turkish context, and is one of few that explained how environmental performance affects the financial performance of Turkish firms.

Can Capital Structure Affect the Financial Performance of Banks in Turkey?

2019 ◽  
Vol 4 (1) ◽  
pp. 17
Author(s):  
Merve Tuncay
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Control Variables ◽  
Return On Equity ◽  
Independent Variables ◽  
Earnings Per Share ◽  
Asset Quality ◽  
The Capital Structure

<p>The aim of this study is to investigate the determinants of banks’ financial performance in terms of the capital structure. Annual financial statements of 11 banks traded in Borsa Istanbul are employed for the period of 2006-2016. Return on assets, return on equity and earnings per share are chosen for financial performance measures. The independent variables related to the capital structure are capital adequacy, equity-to-asset, and financial leverage ratios. In addition, macroeconomic variables and bank-specific variables are also considered as control variables for the analysis. The data are analyzed by the panel data regression analysis as it provides more informative finding and less multicollinearity among variables than time series and cross-sectional analyzes.</p><p>The Hausman test results indicate that the random effects model is appropriate for the whole dependent variables. According to the findings; while equity-to-asset ratio affects return on assets positively, amongst the control variables specific to firms, firm size, asset quality and asset growth variables have significant effects on return on assets. It is found no significant effect of independent variables on return on equity, however, it is seen that asset quality has a negative and significant effect. Inflation and interest rates have a significant effect on both variables. Finally, it is seen that equity-to-asset ratio has a positive and significant effect on earnings per share. Only the effect of asset quality on earnings per share is found to be significant among the control variables. Findings of the study are consistent with the previous studies. In addition, the M&amp;M views are not supported by the findings related to return on assets and earnings per share but the return on equity.</p>

Capital Structure, Growth and Profitability: Evidence from Domestic Commercial Banks in Cambodia

2018 ◽  
Vol 5 (1) ◽  
pp. 31-38
Author(s):  
Khun Sokang ◽  
Nop Ratanak
Keyword(s):  
Capital Structure ◽  
Commercial Banks ◽  
Positive Relationship ◽  
Negative Impact ◽  
Return On Assets ◽  
Significance Level ◽  
Return On Equity ◽  
The Impact ◽  
The Relationship ◽  
Pls Method

This paper aims to examine the impact of capital structure and growth on the profitability of domestic commercial banks in Cambodia. The study uses a panel least squares (PLS) method using a sample of 10 domestic commercial banks in Cambodia over the period of 2005-2013 to examine the relationship between capital structure, growth, and profitability of commercial banks. The finding reveals that capital structure variables including debt to equity (DE), equity to loan (EL), and equity to deposit (ED) have a significantly negative impact on return on assets (ROA) and return on equity (ROE) with 1% significance level. Moreover, the growth variables including growth in assets (GA) and growth in equity (GE) have shown a positive relationship with ROA and ROE. A significant relationship exists only between GE and ROE at 1% significance level.

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