International Journal of Economics, Finance and Management Sciences

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Capital Structure Effects on Banking Performance: A Case Study of Jordan

Received: 31 July 2013    Accepted:     Published: 20 September 2013
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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.

DOI 10.11648/j.ijefm.20130105.13
Published in International Journal of Economics, Finance and Management Sciences (Volume 1, Issue 5, October 2013)
Page(s) 227-233
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This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Capital structure, Bank performance, Total debt, Jordan

References
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Author Information
  • Department of Banking & Finance, Faculty of Finance & Administrative Sciences, Irbid National University, Irbid, Jordan

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  • APA Style

    Khalaf Taani. (2013). Capital Structure Effects on Banking Performance: A Case Study of Jordan. International Journal of Economics, Finance and Management Sciences, 1(5), 227-233. https://doi.org/10.11648/j.ijefm.20130105.13

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    ACS Style

    Khalaf Taani. Capital Structure Effects on Banking Performance: A Case Study of Jordan. Int. J. Econ. Finance Manag. Sci. 2013, 1(5), 227-233. doi: 10.11648/j.ijefm.20130105.13

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    AMA Style

    Khalaf Taani. Capital Structure Effects on Banking Performance: A Case Study of Jordan. Int J Econ Finance Manag Sci. 2013;1(5):227-233. doi: 10.11648/j.ijefm.20130105.13

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  • @article{10.11648/j.ijefm.20130105.13,
      author = {Khalaf Taani},
      title = {Capital Structure Effects on Banking Performance: A Case Study of Jordan},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {1},
      number = {5},
      pages = {227-233},
      doi = {10.11648/j.ijefm.20130105.13},
      url = {https://doi.org/10.11648/j.ijefm.20130105.13},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijefm.20130105.13},
      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.},
     year = {2013}
    }
    

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    T1  - Capital Structure Effects on Banking Performance: A Case Study of Jordan
    AU  - Khalaf Taani
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    AB  - 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.
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