Capital Structure Effects on Banking Performance: A Case Study of Jordan
International Journal of Economics, Finance and Management Sciences
Volume 1, Issue 5, October 2013, Pages: 227-233
Received: Jul. 31, 2013; Published: Sep. 20, 2013
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Author
Khalaf Taani, Department of Banking & Finance, Faculty of Finance & Administrative Sciences, Irbid National University, Irbid, Jordan
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Abstract
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.
Keywords
Capital structure, Bank performance, Total debt, Jordan
To cite this article
Khalaf Taani, Capital Structure Effects on Banking Performance: A Case Study of Jordan, International Journal of Economics, Finance and Management Sciences. Vol. 1, No. 5, 2013, pp. 227-233. doi: 10.11648/j.ijefm.20130105.13
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