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Int. J. Financial Stud. 2017, 5(2), 13; doi:10.3390/ijfs5020013

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

1
Department of Finance and Banking, Begum Rokeya University, Rangpur 5400, Bangladesh
2
International Business College, Dongbei University of Finance and Economics, Dalian 116025, China
3
Department of Business Management, Skyline University College, Sharjah 1797, UAE
*
Author to whom correspondence should be addressed.
Academic Editor: Nicholas Apergis
Received: 22 November 2016 / Revised: 9 March 2017 / Accepted: 30 March 2017 / Published: 3 May 2017
View Full-Text   |   Download PDF [281 KB, uploaded 3 May 2017]

Abstract

The capital structure decision plays an important role in the performance of a firm. Therefore, there have been many studies inspecting the rapport of capital structure with the performance of firms, although the findings of these studies are inconclusive. In addition, there is a relative deficiency of empirical studies examining the link between capital structure and the performance of banks in Bangladesh. This study attempts to fill this gap. Using the 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. The results of the pooled ordinary least square analysis showed that capital structure inversely affects bank performance. The findings of this empirical study are of greater significance for the developing countries like Bangladesh because it calls for the concentration of the bank management and the policy makers to pursue the policies that reduce reliance on debt to achieve the optimal level of capital structure. The results of this study are also analysed in the light of earlier studies. View Full-Text
Keywords: capital structure; firm performance; panel data; unit root analysis; Bangladesh capital structure; firm performance; panel data; unit root analysis; Bangladesh
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

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.

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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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