NDLI: Bank Characteristics Effect on Capital Structure: Evidence from PMG and CS-ARDL

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Bank Characteristics Effect on Capital Structure: Evidence from PMG and CS-ARDL

Content Provider	MDPI
Author	Ahmet, Erülgen Ahmet, Adalıer Rjoub, Husam
Copyright Year	2020
Description	The main aim of this paper was to investigate the impact of bank characteristics on capital structure empirically. The study employed a panel data analysis, Pooled Mean Group (PMG) and Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) estimators were utilized, for the period spans between the years 2008 and 2018. Both the borrowing (leverage) ratio and equity ratio used in the analysis cover short-term deposits and long-term deposits as a fundamental determinant variable on the capital structure. The main findings confirm that the deposit ratio has a positive relationship with the size of the bank. In other words, big banks use more foreign sources than small banks to use the tax shield advantage. At the same time, a percentage increase in bank size and liquidity ratio enhance the bank deposit rate by 0.0068% and 0.479%, respectively, in the long-run, while a percentage change in interest income coverage will reduce the bank deposit rate by 0.004% in the long-run. Meanwhile, the significant causal relationship of growth rate with the bank deposit rate could not be established. In addition, the short-run coefficients of the variables reveal that size, interest coverage, and liquidity have a positive and significant causal relationship with bank deposit rate in the short-run. The findings of the study are in line with the results of capital structure theories, especially the hierarchy theory and balancing theory.
Starting Page	310
e-ISSN	19118074
DOI	10.3390/jrfm13120310
Journal	Journal of Risk and Financial Management
Issue Number	12
Volume Number	13
Language	English
Publisher	MDPI
Publisher Date	2020-12-04
Access Restriction	Open
Subject Keyword	Journal of Risk and Financial Management Social Sciences, Interdisciplinary Optimum Capital Structure Financing Profitability Bank Size Pmg Cs-ardl
Content Type	Text
Resource Type	Article

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