The impact of the capital structure on Iraqi banks’ performance

Jadah, Hamid Mohsin; Hassan, Aya Adel; Hameed, Teba Majed; Al-Husainy, Noor Hashim Mohammed

doi:10.21511/imfi.17(3).2020.10

Cited by 8 publications

(3 citation statements)

References 15 publications

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“…Although the results of these studies have different scopes and objectives, they also have different meanings. The empirical findings indicate that the structure of capital has a detrimental impact on bank performance; that is, if the structure of capital is not appropriate, commercial banks' profits decrease (Siddik et al, 2017;Qayyum & Noreen, 2019;Jadah et al, 2020). The majority of the study's findings suggest that banks that achieve success through earnings from assets have a significant positive relationship with the ratio of equity to assets, percentage of liabilities to assets, and bank size (Ghosh & Chatterjee, 2018;Lama et al, 2014;Ayalew & McMilla, 2021).…”

Section: Literature Reviewmentioning

confidence: 95%

Commercial banks’ capital structure and performance in Vietnam: Panel data model approach

Van Dinh,

Thi Thu Huyen

2024

Banks and Bank Systems

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The study delves into the factors that influence the capital structure of commercial banks in Vietnam. Capital structure, measured by the net debt-to-asset ratio, is a key indicator of bank leverage. The study uses pooled OLS, fixed effects, and random effects models to analyze the impact of factors such as net interest-earning rate, Corporate Income Tax rate, and liquidity on commercial banks’ profitability and their capital structure. Data from 26 banks during the 2010–2022 period in Vietnam was collected for the analysis. The results indicate that factors such as Tax, ROA, growth, and liquidity have significant impacts on the capital structure of the banks. Specifically, Tax has a beta coefficient of –0.05967, ROA has a beta of –0.01796, growth has a beta of 0.000509, and liquidity has a beta of –0.00045. The study found that ROA, Tax, and liquidity are negatively related to the capital structure of Vietnamese commercial banks, meaning that an increase in these factors leads to a decrease in the banks’ total debt-to-total assets and vice versa. The empirical results suggest that commercial banks can manage their capital structure through these factors to reduce their debt-to-asset ratio, resulting in reduced credit risk, improved asset quality, and increased business efficiency. However, lowering the debt-to-asset ratio may also lead to reduced profits from lending activities, particularly when interest rates are high.

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Section: Literature Reviewmentioning

confidence: 95%

Commercial banks’ capital structure and performance in Vietnam: Panel data model approach

Van Dinh,

Thi Thu Huyen

2024

Banks and Bank Systems

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“…In reality, the capital structure can be very complex and includes dozens of sources of capital. Miglo et al (2014), Jadah et al (2020) claimed that there are many factors that are not taken into consideration that will affect the company's capital structure policy. Factors such as comparative firms, problem control, life cycle, debt theory, and discipline.…”

Section: Financial Structurementioning

confidence: 99%

Measuring the Extent of Liquidity's Impact on the Financial Structure

Ali,

Ayat,

Amna

2023

ijfirm

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Purpose:The study aimed to know the most important measures of liquidity affecting the financial structure, and the study was conducted on the Asia Cell Communications Company in Iraq and data were collected for the period (2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019). Design/Methodology/Approach: To achieve the objectives of the study, a time series analysis was conducted to find out the degree of financial stability, conducting autocorrelation relations, an analysis Simple linear regression, a number of hypotheses regarding the regression have been realized, and some of them were counterproductive, and the reasons for this were explained. Findings: As for the most important finding of the study is that the financial structure of the company depends largely on debt, which makes it lose flexibility, and that cash liquidity is insufficient to meet the company's short-term obligations. Practical Implications: The most important recommendation was to raise the market value of the company's shares and approve financing through stock offering. Originality/Value: The need to appoint experts in the field of advanced financial analysis in the company in order to develop financial plans.

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“…Also, Deloof and Van Overfelt (2008) found that before WWI, the capital structure determinants was the same as nowadays. Nonetheless, the study of Jadah et al (2020) found that capital structure slows down changes throughout the liquidity crisis. Also, be become more risk averse towards the debt after the liquidity crisis, especially the most reason behind that crisis was highly dependency on leverage.…”

Section: Empirical Reviewmentioning

confidence: 99%

Dynamic Panel Data Analysis of Capital Structure Determinants: Evidence from Iraqi Banks

Jadah

Hasan

Al-Husainy³

2020

Journal of Business Strategy, Finance and Management

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This study investigates if the choice of capital structure of Iraqi banks could be interpreting through factors which have been studied by prior studies, which represented by determinants of capital structure choice (i.e., bank size, bank profitability, bank growth, tangibility, bank age). Using dynamic panel GMM for the period 2005 to 2019, this study maintains the explore on the determinants of capital structure of Iraq banks "developing country" that has circumstances likely to be quite different from those in developed and other major developing countries, particularly in terms of it deteriorating economic environment. The findings indicate that the bank size, bank profitability, bank age have a dominant role in explaining the variation in the long-term debt ratios of Iraqi banks. Meanwhile, only bank size, bank profitability, bank growth, bank age has a leading role in interpreting the variation of short-term debt ratios in the Iraqi banks. The current study has initiated some basis to discover the capital structure determinants of Iraqi banks upon which a more detailed evaluation could be based. Moreover, the experimental results can help Iraqi banks directors to choose the optimum structure of capital.

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The impact of the capital structure on Iraqi banks’ performance

Cited by 8 publications

References 15 publications

Commercial banks’ capital structure and performance in Vietnam: Panel data model approach

Commercial banks’ capital structure and performance in Vietnam: Panel data model approach

Measuring the Extent of Liquidity's Impact on the Financial Structure

Dynamic Panel Data Analysis of Capital Structure Determinants: Evidence from Iraqi Banks

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