Cogency of Capital Structure Theories to an Islamic Country: Empirical Evidence from the Kuwaiti Banks
Ahmad Al Kandari and
Additional contact information
Kamal Naser: Financial and Economic Advisor, Kuwait Fund, Kuwait
Abdullah Al-Mutairi: Department of Economics and Finance, Gulf University for Science and Technology, Kuwait
Ahmad Al Kandari: Department of Banking and Insurance, Public Authority for Applied Education and Training, Kuwait,
Rana Nuseibeh: Free Financial Analyst, UK.
Authors registered in the RePEc Author Service: Abdulla Kh. Almutairi, Sr. ()
International Journal of Economics and Financial Issues, 2015, vol. 5, issue 4, 979-988
This study is set out to examine the cogency of capital structure theories in a unique Islamic financial environment where tax shield is irrelevant, paying or receiving interest is undesirable and government exercises control over major economic activities. To achieve this objective, the annual reports of all Kuwaiti banks listed on the Kuwait Stock Exchange for the period between 2010 and 2014 were used to extract internal bank variables. In addition, external macroeconomic data were extracted from World Bank statistics. The results of the pooled regression analysis disclosed that the capital structure of the Kuwaiti banks are influenced by their size measured by total assets, cash dividends paid and the market value/book value of the bank's share. While the result was inconsistent with agency theory, it provides support to the pick-order, trade off and market theories.
Keywords: Capital Structure; Firm Size; Pecking Order Theory; Static Trade-Off Theory; Banking Sector; Kuwait Stock Exchange; Kuwait (search for similar items in EconPapers)
JEL-codes: C42 G21 G32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2015-04-17
Access Statistics for this article
International Journal of Economics and Financial Issues is currently edited by Ilhan Ozturk
More articles in International Journal of Economics and Financial Issues from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().