Commercial Banks Performance in Ghana: Does Capital Structure Matter?

Yakubu, Ibrahim Nandom and Alhassan, Mohammed Mubarik and Mikhail, Abdul Azeez and Alhassan, Abdul-Nasiru Iddrisu (2017): Commercial Banks Performance in Ghana: Does Capital Structure Matter? Published in: International Journal of Accounting and Financial Reporting , Vol. 7, No. 1 (12 June 2017): pp. 333-342.

Abstract

This study seeks to investigate the relationship between capital structure and commercial banks performance in Ghana. Using a panel data of listed commercial banks spanning from 2010-2015, the Ordinary Least Squares regression model is employed to estimate the functions relating to bank performance (measured by Return on Equity) with measures of capital structure. The findings show statistically significant relationship between commercial banks’ performance and all the capital structure measures (the ratios of short-term debt to total capital, long-term debt to total capital, and total debt to total capital). Whereas total debt and banks’ performance are positively correlated, short-term debt and long-term debt are inversely related to banks’ performance. In essence, using large proportion of debt significantly enhance commercial banks performance in Ghana.

• Item Type: MPRA Paper
• Language: English
• Keywords: capital structure, commercial banks, performance, Ghana
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics > M20 - General

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