Determinants of Capital Structure of Banks: Evidence from Sub-Sahara Africa

Ebenezer Bugri Anarfo

Asian Economic and Financial Review, 2015, vol. 5, issue 4, 624-640

Abstract: This study seeks to examine the determinants of capital structure of banks in Sub-Sahara Africa. This study has employed the use of panel data techniques to analyze the determinants of capital structure of banks in sub-Sahara Africa The dependent variables used in the study were short-term debt ratio (STDR), long-term debt ratio (LTDR) and the total debt ratio (TDAR). The independent variables were: return on asset (ROA), asset tangibility (TANG), Size of the bank (SIZE), growth rate of total assets (GROWTH), corporate marginal tax rate (TAX ), GDP growth rate (GDPGR), interest on loans (INTEREST), inflation rate (INFLR)The results from Levin-Lin-Chu and Im-pesaran-shin unit root test show that all the variables were stationary in levels. The results also indicate that, the return on asset, size, asset tangibility, growth rate of banks and inflation rates are statistically significant in determining the capital structure of banks in Sub-Sahara Africa. However, corporate marginal tax rate, GDP growth rate and the interest rate on loans are not statistically significant in determining banks capital structure in Sub-Sahara Africa.

Keywords: Capital structure; Return on asset; Total debt ratio; Long term debt ratio; Short term debt ratio; Asset tangibility. (search for similar items in EconPapers)
Date: 2015
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