The Impact of Capital Structure on Jordanian Banks Performance (original) (raw)
Related papers
Capital Structure Effects on Banking Performance: A Case Study of Jordan
This study examines the impact of capital structure on performance of Jordanian banks. The annual financial statements of 12 commercial banks listed on Amman Stock Exchange were used for this study which covers a period of five (5) years from 2007-2011. Multiple regressions was applied on performance indicators such as Net Profit (NP), Return on Capital Employed (ROCE), Return on Equity (ROE) and Net Interest Margin (NIM) as well as Total Debt to Total Funds (TDTF) and Total Debt to Total Equity (TDTE) as capital structure variables. Multiple regression models are applied to estimate the relationship between capital structure and banking performance. The results show that bank performance, which is measured by net profit, return on capital employed and net interest margin is to be significantly and positively associated with total debt; while total debt is found to be insignificant in determining return on equity in the banking industry of Jordan.
2018
This research examines the influence of capital structure on firm performance in the Jordanian context, data is obtained of 15 listed banks on Amman Stock Exchange (ASE) from 2002 to 2015. For this reason the Ordinary Least Squares method of multiple regression is applied in carrying out this analysis. The dependent variable for the research is both accounting and market performance measures, while the independent variable is capital structure measured by debt ratio. In addition to other controlled variables: size, growth opportunities, tangibility, risk, and dividend policy. The main result reveals a significant positive influence of capital structure on banks performance, in general. This implies that profitable Jordanian banks depend more on debt as their main financing option with an average of Debt Ratio equals to about 86%, therefore, a support of Trade-Off theory evidence is provided. Key words : Capital Structure, Firm Performance, Debt Ratio, Banking Sector in Jordan. Cette...
2018
Financial structure is a combination of debt and equity and regards as one of the most important issues in banking industry. The purpose of financial structure decision is to create an appropriate combination of financing resources to minimize the cost of capital and thus maximize the company's market value. This study investigates the impacts of banks financial structure on their Returns (ROA and ROE). In addition, it investigates the moderating roles of corporate governance, financial constraints, capital intensity and size. This research is an applied descriptive correlational research. To test the hypotheses, unbalanced panel data is used. The financial data extracted from “Rah Avarde Novin" software and the database of "Tadbir Pardaz" company. The statistical population includes all banks listed on Tehran Stock Exchange during the years 2009 to 2016. The results indicate a positive significant impacts of financial structure and the banks’ ROA and ROE. Moreove...
The Impacts of Capital Structure on Bank Performance A Case of Iraqi Private Banks
Koya university journal of humanities and social science , 2019
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 study investigates the effect of capital structure on the performance of the public Jordanian firms listed in Amman stock market. The study used multiple regression model represented by ordinary least squares (OLS) as a technique to examine what is the effect of capital structure on the performance by applying on 76 firms (53 industrial firms and 23 service corporation) for the period (2001)(2002)(2003)(2004)(2005)(2006).The results of the study concluded that capital structure associated negatively and statistically with firm performance on the study sample generally. In addition, the study found out that there was no significant difference to the impact of the financial leverage between high financial leverage firms and low financial leverage firms on their performance. Finally, the study also showed that the effect of financial leverage on the basis of the growth that there is no difference between the financial leverage of high growth firms and low growth firms on the performance, which it was negatively and statistically.
Capital Structure and Return on Equity in the Banks Accepted in Tehran Stock Exchange
Academic Journal of Accounting and Economic Researches, 2017
The present study has investigated the bank's area. A review of the research literature suggests that much research has been done in this area. The study subject is the examination of the relationship between capital structure and profitability of banks accepted in Tehran Stock Exchange. Assumptions were developed using research variables. The statistical population of the study is the banks accepted in Tehran Stock Exchange. Given the smallness of the study population and because the number of observations will become less than acceptable in quantitative research if sampling, the entire population is used as the sample. Library research method is used and in terms the goal it is an applied research. For analysis of the results, Pearson regression and correlation are used. Results indicate that the three leveraged variables influence on the return on equity, but there is no statistically significant relation with the size of banks.
Capital structure and corporate performance: evidence from Jordan
2007
This study is to investigate the effect which capital structure has had on corporate performance using a panel data sample representing of 167 Jordanian companies during 1989-2003. Our results showed that a firm's capital structure had a significantly negative impact on the firm's performance measures, in both the accounting and market's measures. We also found that the short-term debt to total assets (STDTA) level has a significantly positive effect on the market performance measure (Tobin's Q). The Gulf Crisis
Academic Journal of Accounting and Economic Researches, 2017
The present study has investigated the bank's area. A review of the research literature suggests that much research has been done in this area. The study subject is the examination of the relationship between capital structure and profitability of banks accepted in Tehran Stock Exchange. Assumptions were developed using research variables. The statistical population of the study is the banks accepted in Tehran Stock Exchange. Given the smallness of the study population and because the number of observations will become less than acceptable in quantitative research if sampling, the entire population is used as the sample. Library research method is used and in terms the goal it is an applied research. For analysis of the results, Pearson regression and correlation are used. Results indicate that the three leveraged variables influence on the return on Assets, but there is no statistically significant relation with the size of banks.
International Journal of Economics and Finance, 2015
This paper mainly has two objectives: the first one is to identify the similarity of capital structure between Islamic and Conventional banks; Second objective is to detect the relationship between capital structure variables and performance of Islamic and Conventional Banks in Gulf Countries (GC). This investigation has been performed on a sample of 16 GC Banks (8 Islamic Banks and 8 Conventional Banks) for the period 2005-2014. ROE (return on equity) and ROA (return of asset) have been used as performance measures. Total debt to total assets, Equity to total assets, Debt to equity ratios have been used as capital structure measures. Size of the bank has been considered as dependent variable to identify its relationship with bank performance. Data collected were analyzed by using SPSS software. The results of the research indicate a similarity of capital structure of Islamic banks and Conventional banks in Gulf Countries. ROA as performance measurement has a significant negative relationship with financial leverage and a positive relationship with equity to assets ratio. This relationship is identified at Islamic banks, Conventional banks and all the banks of the sample. Bank size has a positive relationship with ROA and ROE as performance measures in Islamic and Conventional banks.
Capital structure refers to the sources of financing of a company. Financing can range from relatively permanent equity capital to more risky or temporary short-term financing sources. This study aims to analyze the impact of capital structure on financial performance in Islamic banks listed on the Indonesia Stock Exchange (IDX) in 2014. Capital structure is calculated by using total debt to equity capital ratio, whereas financial performance is calculated by using capital, assets, earnings, and liquidity ratios. The population of this study is all Islamic banks listed on the IDX in 2014. Total sample is seven Islamic banks which are determined by purposive sampling. Secondary data is collected from published financial statements of the Islamic banks in 2014, 2013, 2012, 2011, and 2010. The analyses used are descriptive method which describes data objectively and verification method which uses simple linear regression, where the independent variable is capital structure and the dependent variable is financial performance. Tests are carried out with 95% confidence level. The results show that capital structure affects financial performance of the Islamic banks significantly by 69%. This implies that the greater the capital structure of the Indonesian Islamic banks is, the higher the Indonesian Islamic banks performance will be, or vice versa.