Determinants of Bank Capital Structure and Procyclicality of Leverage: An Empirical Analysis From Turkey

Avcı, Emin

doi:10.23892/mbrev.2016128322

Cited by 3 publications

(2 citation statements)

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“…Procyclicality of the leverage indicates that the expansion and contraction of the bank balance sheets accelerate the credit cycles implying that bank leverage and business cycles are related (Binici and Köksal, 2012: 23). Avcı and Çatak (2016) investigates the determinants of bank capital structure and procyclical behaviour of leverage by a panel data analysis with data between 2005 -2014 in order to find out the relation between different type of leverage ratios and asset growth of banks. Furthermore, possible impacts of bank specific and macroeconomic variables on the bank capital structure are discussed.…”

Section: Literature Reviewmentioning

confidence: 99%

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The Procyclicality of the Leverage Ratio in Turkish Banking Sector

Sari

2021

ispecijssh

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The leverage ratio is an important ratio, especially in the banking sector. In this study, it is researched whether the leverage ratio in Turkish banking sector is influenced from the procyclicality in the Turkish economy or how it is influenced. For this purpose, it is focused on leverage ratio and asset rate. As leverage ratio, it is used the external assets / total shareholder’s equity rate and also the total assets / total shareholder’s equity. As indicator for asset quality and change is used the total loans / total assets in Turkish banking sector. The relationship between the leverage ratios and the total loans / total asset rate in the condition of the all else being equal is analysed empirically as a whole with the quarterly banking cumulative sectorial data between 2007 - 2019 by ARDL ( Auto-Regresive Distributed Lag ) method for first time. According to the analysis results, there is a positive and statistically significant relationship between each of the leverage ratios and the total loans / total assets rate in the long run. It indicates that the leverage ratio is procyclical. It means that the leverage ratio increase and also the total loans / total assets rate in banking sector increase. To conclude, as the credit policy, it is recommended to determine countercyclical policy during financial expansion periods for the financial stability.

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Section: Literature Reviewmentioning

confidence: 99%

“…Recently, especially after Global Crisis, these interests increased. In these way, for example, according to Binici and Köksal (2012), Çalışkan (2011), Avcı and Çatak (2016), Kaya and Köksal (2019), the leverage ratio in banking sector is procyclical.…”

Section: Introductionmentioning

confidence: 99%

The Procyclicality of the Leverage Ratio in Turkish Banking Sector

Sari

2021

ispecijssh

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The Determinants of Capital structure in Ethiopian Private Commercial Banks: A Panel Data Approach

Assfaw¹

2020

JEBAV

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A wrong capital structure decision causes business frailer. However, still, what determinants optimal capital structure decision of companies remain the puzzles of many research scholars. This study is, therefore, aimed to investigate the determinants of the capital structure decision of private commercial banks in Ethiopia. The secondary data were obtained from audited annual financial reports of ten private commercial banks and the National Bank of Ethiopia covering the period of 2010-2018. The panel data were analyzed with a clustered robust random effect regression model. The study reveals that there is a significant positive relationship between earning volatility, size of banks, and taxation with leverage while profitability and asset tangibility are found to have a significant negative effect on the banks' leverage decision. The empirical findings of the study imply that the two capital structure theories, static trade-off and pecking order, are essentially explaining the capital structure decision of Ethiopian private commercial banks. Private commercial banks in Ethiopia should pay due attention to the microeconomic variables without overlooking the macroeconomic condition while articulating their optimal capital mix which can minimize the weighted average cost of capital and enhance the value of the company.

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The Capital Structure Determinants on Banking Sector of Western Balkan Countries

Ahmeti

Kalimashi

Ahmeti

et al. 2023

ECO

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The study examines the capital structure of the Western Balkan banking industry across the period 2015 - 2020. Forty-seven of the total Western Balkan-based commercial banks were included in the study. By constructing a balanced panel, this study uses pooled ordinary least squares fixed and random effects regressions to examine the relationship between bank book leverage as the dependent variable and bank-specific explanatory variables that include profitability, leverage ratio, bank size, earnings volatility, collateral, growth opportunities, and liquidity. These reports are examined using linear regression analysis. The study shows a significant positive relationship between profitability and book leverage for the period studied. In contrast, leverage ratio, earnings volatility, collateral, growth, and liquidity significantly negatively impact the book leverage of Western Balkan banks. The findings have practical implications for bank executives. They will assist them in identifying the bank-specific factors that influence the capital structure and selecting values that promote optimal capital structure. The findings of this study can help regulators develop an effective prudential framework. This study opens up new avenues for further research in this area for academics, researchers, and analysts.

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Determinants of Bank Capital Structure and Procyclicality of Leverage: An Empirical Analysis From Turkey

Cited by 3 publications

References 10 publications

The Procyclicality of the Leverage Ratio in Turkish Banking Sector

The Procyclicality of the Leverage Ratio in Turkish Banking Sector

The Determinants of Capital structure in Ethiopian Private Commercial Banks: A Panel Data Approach

The Capital Structure Determinants on Banking Sector of Western Balkan Countries

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