The Impact of Bank Performance and Credit Risk on Capital Structure: An Empirical Evidence of Jordanian Bank Sector

Abstract

The study investigates the impact of credit risk of banks measured by the ratio of  reserves of Loan Losses to Gross Loans, the performance of bank measured by Return on Equity ratio, and Bank size measured by the log of the total assets of the bank on capital structure of banks measured by Equity to Asset ratio on 11 Jordanian commercial banks listed in Amman Stock Exchange over the period 2010–2015, The existence of such a relationship has important implications for bank decision makers.


The study used Fixed Effect Regression; Empirical evidence showed that bank credit risk has a positive effect on capital structure, while the bank performance has a negative impact on capital structure. In addition, bank size as a control variable played a negative role on capital structure. I also recommended that the future researches will directed to pursue the approach by using substitutional accounting indications of banking risk, and to investigate the impact of the firm’s capital performance and risk on its capital structure.

Author Biography

Dua'a Fawzi Shubita, lecturer Department of Finance Business School, Jordan University

Dua'a F. Shubita is a lecturer at the Department of Finance Business School, Jordan University. She received an M.Sc. degree in Finance from Jordan University in 2008. She received her B.Sc degree in Finance from the Jordan University in 2006. She had a traineeship in a brokerage firm and nine years of experience in the academic education sector.  Her research interests are corporate finance, financial management, Bank management, and international finance.

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http://eprints.leedsbeckett.ac.uk/4881/1/TheLongtermRelationshipBetweenEnterpriseRiskManagementPV-SHUBITA.pdf
Published
2018-10-01
How to Cite
SHUBITA, Dua'a Fawzi. The Impact of Bank Performance and Credit Risk on Capital Structure: An Empirical Evidence of Jordanian Bank Sector. Journal of Social Sciences (COES&RJ-JSS), [S.l.], v. 7, p. 350-357, oct. 2018. ISSN 2305-9249. Available at: <http://centreofexcellence.net/index.php/JSS/article/view/jss.2018.7.4.350.357>. Date accessed: 17 nov. 2018. doi: https://doi.org/10.25255/jss.2018.7.4.350.357.
Section
Articles