The Determinants of Banks' Capital Structure: The case of Iran

Mahshid Shahchera ()
Additional contact information
Mahshid Shahchera : Monetary and Banking Research Institute (MBRI), Central Bank of the Islamic Republic of Iran (CBI)

Journal of Money and Economy, 2013, vol. 8, issue 1, 141-167

Abstract: The capital structure and regulation of financial intermediary firms are important topics for regulators and academic researchers. In general, theory predicts that firms choose their capital structures by balancing the benefits of debt against its costs. The purpose of this paper is to analyze capital structure as a function of bank's specific variable factors. It examines the relationship between banks' capital ratio and the determinants of capital structure in the Iranian banking industry. This paper uses a dynamic panel data during the period 2000 to 2009. The main results suggest that z-score, return on equity and business cycle are positively correlated with capital ratio. But size of bank, cost ratio and deposits ratio are negatively correlated with capital ratio. The excess capital held by Iranian banks seems to be explained by their profitability, the high stability and soundness of banking system. Z-score, regulation, liquid asset and product of regulation and business cycle are positively correlated with capital ratio, but size, profitability, loan-asset ratio and deposits ratio are negatively correlated with capital ratio.

Keywords: Capital Ratio; Soundness Banking; Capital Determinants; Dynamic Panel Data (search for similar items in EconPapers)
JEL-codes: C23 G21 G28 G32 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://jme.mbri.ac.ir/article-1-87-en.pdf (application/pdf)
http://jme.mbri.ac.ir/article-1-87-en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmonec:v:8:y:2013:i:1:p:141-167

Access Statistics for this article

More articles in Journal of Money and Economy from Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran Contact information at EDIRC.
Bibliographic data for series maintained by M. E. ().