Preprint Article Version 1 This version not peer reviewed

Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh

Version 1 : Received: 22 November 2016 / Approved: 22 November 2016 / Online: 22 November 2016 (09:36:36 CET)

A peer-reviewed article of this Preprint also exists.

Siddik, M.N.A.; Kabiraj, S.; Joghee, S. Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh. Int. J. Financial Stud. 2017, 5, 13. Siddik, M.N.A.; Kabiraj, S.; Joghee, S. Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh. Int. J. Financial Stud. 2017, 5, 13.

Journal reference: Int. J. Financial Stud. 2017, 5, 13
DOI: 10.3390/ijfs5020013

Abstract

Capital structure decision plays an imperative role in firm’s performance. Recognizing the importance, there has been many studies inspected the rapport of capital structure with performance of firms and findings of those studies are inconclusive. In addition, there is relative deficiency of empirical studies examining the link of capital structure with performance of banks in Bangladesh. This paper attempted to fill this gap. Using panel data of 22 banks for the period of 2005-2014, this study empirically examined the impacts of capital structure on the performance of Bangladeshi banks assessed by return on equity, return on assets and earnings per share. Results from pooled ordinary least square analysis show that there are inverse impacts of capital structure on bank’s performance. Empirical findings of this study is of greater significance for the developing countries like Bangladesh because it will call upon concentration of the bank management and policy makers to pursue such policies to reduce reliance on debt and to accomplish optimal level capital structure. This research also contributes to empirical literatures by reconfirming (or otherwise) findings of previous studies.

Subject Areas

capital structure; firm’s performance; panel data; unit root analysis; Bangladesh

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