 Determinants of Credit Rating and Optimal Capital Structure among Pakistani BanksVivake Anand, Kamran Ahmed Soomro and Suneel Kumar Solanki Romanian Economic Journal, 2016, vol. 19, issue 60, 169-182 Abstract: Firm’s credit rating and optimal capital structure are directly related. Firms with high crediting rating tend to finance more by debts. However, there is no appropriate figure available for optimal capital structure in literature. Firms mostly decide mix of debt and equity based on its operating environment. Knowing fact of high credibility among locals and lower costs associated with debts, managers prefer debts to equity. This paper used factors like profitability, liquidity, firm’s size and leverage, to determine crediting rating of firms. This paper has used data from balance sheets of top twenty banks in Pakistan for last seven years. It was found that profitability and liquidity have negative impacts on credit rating of banks in Pakistan, while size and leverage being more significant have positive correlation with credit rating. Keywords: Credit rating; Capital structure; Commercial Banks (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:rej:journl:v:19:y:2016:i:60:p:169-182 Access Statistics for this article Romanian Economic Journal is currently edited by Ioan Popa, PhD More articles in Romanian Economic Journal from Department of International Business and Economics from the Academy of Economic Studies Bucharest Contact information at EDIRC. |
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