scholarly journals Capital Structure and Bank Performance: Empirical Evidence from Bangladesh

2020 ◽  
Vol 12 (1) ◽  
pp. 161
Author(s):  
Md. Ibrahim Molla
Keyword(s):  
Capital Structure ◽  
Positive Impact ◽  
Stock Exchange ◽  
Positive Influence ◽  
Bank Performance ◽  
Total Debt ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

The paper empirically investigates the relationship between capital structure and the performance of listed banks in Bangladesh using panel data over the period of five years from 2014-2018. To estimate the association between leverage level and bank performance the Panel Corrected Standard Error (PCSE) model is used in this study and the findings indicate that long term debt has a positive influence on the performance of banks which is measured in terms of ROA and ROE. This implies that long term debts are associated with the higher performance of banks listed in Bangladesh. The regression results also reveal that the capital structure component of total debt has no statistically significant impact on ROA, ROE and EPS but it has a significant positive impact on the performance of banks measured by price earning ratio. Furthermore, this analysis finds no relationship of long term debt and total debt with the EPS. These findings lead to conclude that capital structure has a weak to no influence on the performance of listed banks in Bangladesh. This paper is the first research attempt that investigates the impact of capital structure on the performance of all banks listed on the Dhaka Stock Exchange in Bangladesh.

An Empirical Study on Capital Structure and Corporate Performance of Chinese Listed Companies

2016 ◽  
Vol 5 (3) ◽  
Author(s):  
Fahd Al-Duais
Keyword(s):  
Capital Structure ◽  
Corporate Performance ◽  
Positive Impact ◽  
Stock Exchange ◽  
Listed Companies ◽  
Short Term ◽  
Chinese Listed Companies ◽  
The Impact ◽  
The Relationship

The relationship between level of debt and the companys performance remains an important unsolved issue in the field of financing. It is very important to know how Chinas listed companies manage their capital towards business growth. This paper investigates the impact of the capital structure on corporate performance of a sample of 711 listed companies on the Shenzhen Stock Exchange in China in 2014. The results indicates that there is a positive relation between financial leverage and corporate performance as well as there is a positive impact that the mixture of long-term debt and short-term debt (using total debt). This would help decision maker in the companies to finance firms operation in the both periods. On the other hand, the short term debt has a negative relation and impact on corporate performance compared to the changing in firm size which cannot change in the profitability of firms.

scholarly journals Impact of Capital Structure on Profitability:An empirical analysis of listed firms in India

2018 ◽  
Vol 7 (2) ◽  
pp. 1-6
Author(s):  
Atif Ghayas ◽  
Javaid Akhter
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Short Term ◽  
Return On Equity ◽  
Listed Firms ◽  
Relationship Capital ◽  
The Impact ◽  
The Relationship ◽  
Positive Effect

This study aims to empirically examine and analyze the impact of capital structure decision on the firm’s profitability by using a sample of 35 Indian pharmaceutical companies listed on Bombay Stock Exchange (BSE) during the period of 5 years from 2012 to 2016. Regression Analysis is used to measure the extent and nature of the relationship. Capital structure variables used in the study are ratio of long-term debt to total assets (LDA), ratio of short-term debt to total assets (SDA) and ratio of Total debt to total assets (DA) while profitability has been measure by Return on Equity (ROE). Firms Size (SIZE)and Salesgrowth(GROW) are also used as control variables. Results reveal a positive effect of SDA and DA on ROE, while a weak-to-no effect was found of LDA on ROE.

scholarly journals The Capital Structure and It’s Impact on the Profitability of the FMCG Companies in India – A Study

2021 ◽  
Vol 04 (10) ◽  
Author(s):  
Dr. Amalesh Patra ◽  
Keyword(s):  
Capital Structure ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Book Value ◽  
Coverage Ratio ◽  
Total Debt ◽  
Lm Test ◽  
The Impact ◽  
The Capital Structure

The purpose of this study is to examine the impact of the capital structure on the profitability of the companies under the FMCG sector listed in the National Stock Exchange (NSE) of India. The sample of 10 companies over 14 years from 2007 to 2020 is considered in this study. To examine the impact of capital structure on the profitability, Total Debt to Total Assets (TDTA) Debt- Equity (DE), Interest Coverage Ratio (ICR) consider as the independent variables, Price to Book Value Ratio (PBVR) and Growth (GROW) considered as the control variables and Return on Capital Employed (ROCE) considered as dependent variable (profitability). To fulfil the objective of the study Pearsons' Correlation has been conducted for testing the Collinearity, Shapiro- Wilk test has been run for normality test of the variables, to test the Stationary Hadri LM test, Kao and Pedroni test for cointegration test and to choose the appropriate model Hausman test and finally, for the result, I run Fixed Effect Model. The result of the Regression analysis showed that Total Debt to Total Assets (TDTA), Debt- Equity (DE), Interest Coverage Ratio (ICR), and Price to Book Value are the factors that have an impact on the Profitability (ROCE) of the company. The empirical result also suggests that total debt to Total Assets (TDTA), Interest Coverage Ratio (ICR), and Price to Book Value of the company have a positive impact but Debt -Equity has a negative impact on the ROCE

Empirical Analysis of Dependence on Capital Structure with Respect to Its Impact on the Financial Performance of Domestic Non Financial Listed Stock Exchange Companies Operating in the Public Sector of Pakistan

2016 ◽  
Vol 3 (2) ◽  
pp. 58-76
Author(s):  
Syed Jawad Hussain Shahzad ◽  
Memoona Kanwal
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Stock Exchange ◽  
Random Effect ◽  
Random Effect Model ◽  
Research Work ◽  
Debt Financing ◽  
The Impact ◽  
The Relationship

This research work is based on the relationship that exists between the capital structure and performance of different sector's firms currently operating in the Pakistan. Capital structure decisions can be considered as the most important financial performance and risk management tools which are available to the companies' management. Capital structure can also play an important role in performance assessment, in performance management and in effective handling of ownership claims. The extensive use and heavy dependence on debt has exposed many companies to potential risk of declined performance and also to the risk of insolvency. This study analyzes the relationship between various capital structure indicators and dependence of financial performance of companies on these indicators using a broad sample covering 202 non-financial firms listed on Karachi Stock Exchange (KSE) over the period of 1999-2012. The sample firms are divided into five sectors i.e. Textile, Chemical, Cement, Food and Fuel & Energy. Financial performance of firms is quantified by Return on Assets (ROE), Return on Equity (ROE), Price-Earnings ratio (PE) and Tobin's Q (TQ). The relationship between financial performance measures and capital structure measures i.e. total debt, short term debt and long term debt is estimated using GLS fixed and random effect model. Sector wise comparison shows that majority of the sectors have similar capital structure. The impact of capital structure on the financial performance is also similar across sectors with few variations. Overall the relationship is found to be negative among capital structure and firm performance measured by ROA, ROE and PE except TQ which is positively related to Long Term Debt to total Assets (LTDA). The result of industry wise comparison contributes significantly to the existing stream of knowledge. The results indicate that lower reliance on the debt financing improves the performance of the firm whereas dependence and exposure of debt financing reduce performance. The research can be useful for the management of companies in different sectors that want to improve their performance.

scholarly journals The Impact of Different Firm Sizes on Capital Structure Determinants Among Listed Consumer Product Firms In Malaysia

2018 ◽  
Vol 5 (2) ◽  
pp. 1-6
Author(s):  
Hishan S Sanil ◽  
Ahmad Amirul Arsyad bin Noraidi ◽  
Suresh Ramakrishnan
Keyword(s):  
Capital Structure ◽  
Annual Report ◽  
Fixed Effect ◽  
Consumer Product ◽  
Short Term ◽  
Effect Analysis ◽  
Total Debt ◽  
The Impact ◽  
The Relationship

This research is conducted to determine the impact of different firm sizes on the relationship between capital structure determinants and leverage among listed consumer product firms in Malaysia from year 2006 to 2015. All data was taken from annual report of the companies by using DataStream. In 2015, 130 firms were listed in Bursa Malaysia under the consumer product sector. However, only 108 firms were observed as several firms had insufficient data. This study uses the dependent variable of debt ratios i.e. short-term debt, long-term debt and total debt. The independent variables used are firm size, profitability, tangibility, liquidity, growth, non-tax debt shield and business risk. Those results were obtained by applying Pooled OLS and Fixed Effect Analysis. The main finding of this study is that different firm sizes will affect the relationship between capital structure determinants and leverage. The Fixed Effect analysis revealed that all determinants were significant across all types firm sizes. Furthermore, non-tax debt shield had the largest impact to all types of leverage across different firm sizes.

scholarly journals Relationship Between Capital Structure and Stock Returns of Jordanian Commercial Banks

2020 ◽  
Vol 13 (2) ◽  
pp. 100
Author(s):  
Sufian Radwan Al-Manaseer
Keyword(s):  
Capital Structure ◽  
Stock Returns ◽  
Firm Size ◽  
Commercial Banks ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
The Impact ◽  
The Relationship

This study aims to analyze the relationship between capital structure and stock returns of Jordanian banks listed on the Amman Stock Exchange from 2009 to 2018. The study sample is composed of 13 commercial banks in Jordan. The e-views program is used to conduct the statistical analysis of study variables. Initially, a simple linear regression analysis is conducted to determine the impact of capital structure as measured by financial leverage on stock returns and vice versa. Then, several control variables are added: growth in assets, liquidity, firm size, and profitability. This study has found that growth, capital structure, and profitability have a positive impact on stock returns. By contrast, liquidity and firm size have a negative impact on stock returns. Stock returns and firm size have a positive impact on capital structure, whereas liquidity, growth, and profitability have a negative impact on capital structure.

scholarly journals CAPITAL STRUCTURE AND BANK PERFORMANCE OF ISLAMIC AND COMMERCIAL IN YEMEN

2021 ◽  
Vol 9 (12) ◽  
pp. 39-49
Author(s):  
Samer Ahmed Ali Assirri ◽  
C.K. Hebbar
Keyword(s):  
Capital Structure ◽  
Banking Sector ◽  
Positive Impact ◽  
Bank Performance ◽  
Short Term ◽  
Return On Assets ◽  
Return On Equity ◽  
Independent Variables ◽  
Total Debt ◽  
The Impact

This study aims to examine the impact of capital structure on bank performance. This research verified the existence of several relationships between capital structure as measured by LAR, EAR, and Total Debt ratio on bank’s performance as measured by ROA and ROE, EPS, and NPM. Using the panel data of bank from 2010 to 2019, In Islamic banks , the results of the present study revealed that the contributions of the capital structure to ROA were significant. This result was in line with the findings of the past studies. For instance, El-Chaarani and El-Abiad (2019) found that positive and significant impacts of short-term debt and total debt on the return on equity of the banking sector in Middle East region, a negative and significant impacts of short-term debt and total debt on the return on assets, and a positive impact of long-term debt on the return on assets ratio. In commercial banks sector the regression analysis revealed that the contributions of the three independent variables to the EPS were non-significant. Also, the contributions of the total debt and LAR to the independent variables ROE were significant. In contrast, the contribution of the EAR to the independent variable ROE was non-significant. Moreover, the contribution of the LAR to NPM was significant. Also, the contributions of the EAR and the total debt to NPM were non-significant. Furthermore, the contributions of the LAR and EAR to ROA were significant. In contrast, the contribution of the total debt to ROA was non-significant. In general, the contributions of the LAR and EAR to ROA were significant.

scholarly journals Impacts of Capital Structure on Bank Performance

2019 ◽  
Vol 2 (1) ◽  
pp. 118-123
Author(s):  
Sardar SH. Ibrahim
Keyword(s):  
Capital Structure ◽  
Positive Impact ◽  
Least Square ◽  
Annual Reports ◽  
Bank Performance ◽  
Return On Assets ◽  
Return On Equity ◽  
Probability Of Survival ◽  
Total Debt ◽  
The Impact

Purpose: This study studies the effect of capital structure on the performance of some Iraqi private banks. Six banks based in Iraq namely: Babylon Bank, Investment Bank, Credit Bank, Commercial Bank, Sharq Al-Awsat Bank, and Baghdad Bank were selected for the present study over the period 2005 to 2015. Methodology: Annual reports of these banks were studied and relevant ratios were calculated. The variables that were identified as independent for capital structure were total debt to capital, bank size and asset growth, while return on assets and return on equity were considered to be dependent variables for bank performance. The panel Least Square model has been used to examine the impact of capital structure on bank performance. Findings:  Outcomes indicate that none of the independent variables has a significant impact on return on assets (ROA), while total debt to capital (TDC) has a positive impact on return on equity (ROE). Reduction: Depending on this result, Iraqi banks should keep sufficient amount of capital to avoid any financial risks and increase the probability of survival.

The Impact of Firm Specific Factors on Capital Structure

2014 ◽  
Vol 1 (2) ◽  
pp. 1-21
Author(s):  
Mehtap Öner
Keyword(s):  
Capital Structure ◽  
Positive Impact ◽  
Total Asset ◽  
Debt Ratio ◽  
Growth Opportunities ◽  
Industrial Enterprises ◽  
Total Debt ◽  
Specific Factors ◽  
The Impact

The main aim of this study is to analyze the impact of firm specific factors on corporate capital structure decisions of firms. The analysis is based on the year end observations of 100 firms which are among the top 1000 industrial enterprises listed on Borsa Istanbul for the period 2005-2011. By using panel data methodology, five explanatory variables: tangibility, profitability, firm size, non-debt tax shields and growth opportunities are evaluated as the firm specific determinants of capital structure decisions. The leverage ratio which is the dependent variable of the analysis is used as the proxy of firms' capital structure. In order to test whether crucial results are robust to alternative leverage definitions, this study measures leverage as the firm's total debt to total asset and long term debt to total asset ratios by focusing both on book and market based measures. The major findings of the study with respect to financing decisions of firms provide significant and positive impact of tangibility on long term debt ratio, however it turns out to be inverse for total debt ratio. In addition, it is found that profitable firms tend to have lower leverage; and larger companies tend to have higher debt ratios compared to small ones. What is more, evidence support that firms with greater growth opportunities and non-debt tax shield reveal inverse relation with debt level. Except the impact of growth opportunities which is only significant for market based leverage ratios, the findings for all other variables are robust for different definitions of leverage.

scholarly journals Struktur Modal dan Kinerja Perusahaan (Studi pada perusahaan yang terdaftar di Bursa Efek Indonesia periode 2011 s/d 2012)

2014 ◽  
Vol 5 (1) ◽  
Author(s):  
Novi S Budiarso
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Firm Value ◽  
Stock Exchange ◽  
Optimal Level ◽  
Stock Exchanges ◽  
Listed Firms ◽  
Total Debt ◽  
The Impact

Abstract This paper examine the impact of capital structure on firm performance, in Indonesian Stock Exchange. Firm performance are analyzed from the side of accounting indicators, in this research use liquidity. Because the optimal level of debt of the firm is limited by the liquidity of the assets and it depends on the average usage of the debt in the particular industry. In the other side liquidity  is  conventionally  seen  as  reflecting  investors’  degree  of  risk -aversion, The study collects  of listed firms in Indonesian Stock Exchanges during 2011 to 2012. The listed firms on sub sector trade, services and investment. Multiple Regression analysis approach was employed in carrying out this analysis. Specifically, determined the simultaneous relationships among the various variables. The results show that as partial total debt to asset significantly influences to company’s performance but long term debt to asset not significantly influences to company’s performance. Simultaneously, total debt to asset and  long term debt to asset influences company’s performance. This evidence is consistent with models of optimal capital structure and with the hypothesis that debt level changes release information about changes in firm value/performance.

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