Parametric, Non-Parametric and Multivariate Analysis of Capital Structure During the Financial Crises in Jordanian Banks (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.
The Impact of Capital Structure on Jordanian Banks Performance
Journal of Social Sciences (COES&RJ-JSS), 2021
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.
Internal Determinants of Capital Structure of Islamic Banks: Evidence from the Middle East
Deleted Journal, 2024
This study aimed to determine the factors affecting the capital structure of Islamic banks for a sample of the Middle East for the period 2011-2021. The study used a panel data method by pooling ordinary least squares, fixed effects, and random effects to determine the relationship between book leverage and internal variables such as profitability, size, non-debt tax shield, growth opportunity, tangibility, liquidity, and earnings volatility. The descriptive statistics indicate that Islamic banks are highly leveraged. The results of regression showed that the impact of profitability, size, and growth opportunity is positive on book leverage. In contrast, the results indicated a negative impact of non-debt tax shield and liquidity on book leverage. The results also showed no impact of tangibility and earnings volatility on book leverage. Based on the results, Islamic banks in the Middle East enjoy a special method of choosing capital structure depending on their competitive advantage derived from the concentration of a large proportion of Muslim people dealing with them. Nevertheless, the management of Islamic banks must take the mentioned variables into consideration.
Determinants of Capital Structure: Evidence from Jordan
SCIEDU , 2019
This study aimed to explore the determinants of the capital structure of the banks listed in the Amman Stock Exchange. A sample of 13 Jordanian commercial banks of 16 banks listed on the Amman Stock Exchange selected for the period 2008-2017. The current study applied a fixed-effects regression model by using e-views to analyze the relationship between financial leverage and firm characteristics such as Risk, Size, profitability, Growth, liquidity, Tax, Age, tangibility, and macroeconomic variables such as Gross Domestic Product, Inflation. The study finds a significant positive relationship between financial leverage, age, growth, risk, size, and tax. Also, the study finds a significant negative relationship between financial leverage with GDP, inflation, liquidity, profitability, and tangibility.
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...
Factors Affecting Capital Structure of the Banks Listed on Iraqi Stock Exchange (2009-2014)
Humanities Journal of University of Zakho
The current study aims to examine the factors affecting capital structure of (16) banks listed on the Iraqi Stock Exchange (ISX) during the period 2009 to 2014. Several factors could have an impact on capital structure. While, this study concentrates on four characteristics of Iraqi banks and attempts to identify their effect on financing decision of these banks. Growth, profitability, liquidity and size have been used as independent variables. However, the study depends on leverage as a dependent variable to measure the capital structure of banks. Using a multiple linear regression model by (SPSS) program different results have been revealed. The findings show that growth is not one of the determinants of capital structure and it has no effect on the leverage of these banks at all. While, there is a statistically negative relationship of capital structure choice with profitability and liquidity. On the other hand, the findings indicate that the size affects capital structure of th...
The relationship between capital structure and performance of Islamic banks
Journal of Islamic Accounting and Business Research, 2014
Purpose– This paper aims to examine the effect of capital structure on Islamic banks’ (IBs) performance to provide guidance to finance managers for raising capital funds. As newcomers to the markets, IBs are facing a trade-off. They can either use high capital ratios which increase the soundness and safety of the bank and lower the required return by investors, or depend on deposits and Islamic bonds which are considered cheaper sources of funds due to their tax rebate. An IB’s management must carefully decide the appropriate mix of debt and equity, i.e. capital structure, to maximize the value of the bank.Design/methodology/approach– Using a sample of 85 IBs covering banking systems in 19 countries, the study uses a two-stage least squares method to examine the performance determinants of IBs to control the reverse causality from performance to capital structure.Findings– After control of the macroeconomic environment, financial market structure and taxation, results indicate that ...
Determinants of capital structure decisions among publicly listed Islamic banks
Management Science Letters, 2019
This research aims to examine bank specific, market and regulatory determinants of leverage and capital structure based on a panel data of publicly listed Islamic banks in 12 countries over the period 2008-2017. Apart from testing standard corporate finance parameters using both OLS and M-Estimators, this study adds several idiosyncratic and regulatory environment related determinants of leverage unique to Islamic banks. The significance of potential determinants is tested for market and book leverage as well as newly introduced 'Islamic banking leverage'. Overall, the results show that Islamic banks with higher growth opportunities, tangibility, low profitability and low risk are likely to have a high leverage. Similarly, the findings suggest important role played by debt market conditions, share of investment accounts and regulatory environment in such decisions, providing an evidence of the significance of trade-off and pecking order theory in capital structure in Islamic banks. The results are more robust for market and Islamic banking leverage, rather than book leverage. The findings offer insights to regulators, standard setters and especially Islamic banks regarding parameters to strengthen their capital, enhance resilience and thus contribute to the stability of relevant financial. This paper is among the few extant studies that focus on listed Islamic banks and tests determinants based on stock market data.
Comparative Analysis of Islamic and Conventional Banks Capital Structure Determinants
2013
Over the past few years, Islamic banking has grown tremendously in size and expanded beyond Islamic countries and in some countries its presence has become controversial and intriguing. This paper attempts to evaluate the differences in capital structure determinants between Islamic and conventional banks. Our sample was drawn from banks in MENA for the period of 2005 to 2009, comprising of the largest banks in terms of assets within a country. Using a balanced panel data, we classified the population into four samples of: conventional and Islamic banks; tax-paying and non-tax paying economies. The results indicate some similarities between the capital structure of conventional and Islamic banks, in terms of the pecking order theory. However, the results also indicate that conventional banks were larger in size and more leveraged compared with Islamic banks in non-tax paying economies. The results also showed that conventional and Islamic banks in non-tax paying economies were more ...