The Industry Effect on the Relationship Between Leverage and Returns

Artikis, Panayiotis G.; Nifora, Georgia

doi:10.14208/bf03353802

Cited by 7 publications

(2 citation statements)

References 31 publications

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“…Christensen (Christensen, 2015) found, that the risk-return relationship is important only during crisis, otherwise insignificant. Artikis (2011) detected even negative relationship between leverage and profitability.…”

Section: Discussion Of Main Findings and Their Relation To The Review...mentioning

confidence: 98%

Leverage Effect between ROA and ROE During the Covid-Crisis Based on a Hungarian Company Database

Bozsik,

Szemán

2023

TMP

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This paper is devoted to examining two extremely popular financing principles in the practice of Hungarian companies during the Covid-crisis. The leverage effect explains how the Return on Equity can be improved compared to the Return on Assets, the risk matching principle states that the risky assets should be financed mostly from equity and the secure assets should be financed mostly from debt. The Covid-crisis is an excellent opportunity to study the relevance of these principles. The validity of these principles is examined in a sample containing about 30.000 company financial reports. The most important findings are the following: The profitability does not determine the leverage, but the high leverage determines the low profitability. The profitability is the consequence of former decisions about the debt-equity relationship, the debt/equity ratio would be the consequence of the profitability. The risk matching principles cannot be justified by the used sample.

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Section: Discussion Of Main Findings and Their Relation To The Review...mentioning

confidence: 98%

Leverage Effect between ROA and ROE During the Covid-Crisis Based on a Hungarian Company Database

Bozsik,

Szemán

2023

TMP

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“…Far earlier, Juliet (2017) found that there is a significant positive relationship between debt ratio and measure of bank performance. Other studies include (Artikis and Nifora, 2011;Baker and Martin, 2011;and Barakat, 2014).…”

Section: Conclusion and Recommendationsmentioning

confidence: 99%

Selected Internal Factors Affecting Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange in Kenya

NJIGO

2018

strategicjournals.com

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In all economies, including Kenya, banking industry plays an important role as economic stimulus and distribution of growth in the economy. Commercial banks channel funds from depositors to investors and in the process link fundamental economic players of a country. Due to its role, numerous studies have been done on various banking fields. Be that as it may, there is a dearth of studies investigating the impact of deposits, loans, income diversification and financial leverage in financial performance of listed banks in Kenya. To this effect, this study sought to fill in the gap by studying the effects of the specific internal factors on performance of the listed commercial banks. Using cost of deposit, asset quality, Herfndahl Hirschmann Index (HHI) and debit ratio as proxies of the respective internal factor and return on equity as the measure of the bank performance, the main objective was the establish the significance relationship between these factors and bank performance. The study was based on pecking order, trade off, modern portfolio, Modigliani and Miller theories. Descriptive research design was incorporated involving 10 commercial banks listed in Nairobi Securities Exchange (NSE) over a period of study stretching from 2007 to 2016. Random effects panel regression model was used in the analysis. The findings are expected to inform the players in the industry and governmental agencies. The findings indicated that deposits, loans and financial leverage have significant impact on the performance of the listed banks. Income diversification has no significant effects of bank performance. The study recommends a comprehensive policy framework to regulate interest rates and to maintain asset quality. Lastly, the study recommends the banks to sufficiently use internal funds before considering debt-financing.

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A learning-augmented approach to pricing risk in South Africa

Peeperkorn

Seetharam

2016

Eurasian Bus Rev

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The Industry Effect on the Relationship Between Leverage and Returns

Cited by 7 publications

References 31 publications

Leverage Effect between ROA and ROE During the Covid-Crisis Based on a Hungarian Company Database

Leverage Effect between ROA and ROE During the Covid-Crisis Based on a Hungarian Company Database

Selected Internal Factors Affecting Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange in Kenya

A learning-augmented approach to pricing risk in South Africa

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