Commercial Banks Performance in Ghana: Does Capital Structure Matter?

Ibrahim Nandom Yakubu, Mohammed Mubarik Alhassan, Abdul Azeez Mikhail and Abdul-Nasiru Iddrisu Alhassan

MPRA Paper from University Library of Munich, Germany

Abstract: This study seeks to investigate the relationship between capital structure and commercial banks performance in Ghana. Using a panel data of listed commercial banks spanning from 2010-2015, the Ordinary Least Squares regression model is employed to estimate the functions relating to bank performance (measured by Return on Equity) with measures of capital structure. The findings show statistically significant relationship between commercial banks’ performance and all the capital structure measures (the ratios of short-term debt to total capital, long-term debt to total capital, and total debt to total capital). Whereas total debt and banks’ performance are positively correlated, short-term debt and long-term debt are inversely related to banks’ performance. In essence, using large proportion of debt significantly enhance commercial banks performance in Ghana.

Keywords: capital structure; commercial banks; performance; Ghana (search for similar items in EconPapers)
JEL-codes: G3 G32 M20 (search for similar items in EconPapers)
Date: 2017-05-31
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Citations: View citations in EconPapers (1)

Published in International Journal of Accounting and Financial Reporting 1.7(2017): pp. 333-342

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