The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors?
Orientation: The decision to have an optimum mix of capital structure is an issue of concern for financial service firms as much as other firms. Research purpose: The study investigated the impact of the Basel III regulatory requirements and other bank-specific factors on African banks’ capital str...
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| Format: | Article |
| Language: | English |
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AOSIS
2022-10-01
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| Series: | Journal of Economic and Financial Sciences |
| Subjects: | |
| Online Access: | https://jefjournal.org.za/index.php/jef/article/view/742 |
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| author | Ayodeji M. Obadire Vusani Moyo Ntungufhadzeni F. Munzhelele |
| author_facet | Ayodeji M. Obadire Vusani Moyo Ntungufhadzeni F. Munzhelele |
| author_sort | Ayodeji M. Obadire |
| collection | DOAJ |
| description | Orientation: The decision to have an optimum mix of capital structure is an issue of concern for financial service firms as much as other firms.
Research purpose: The study investigated the impact of the Basel III regulatory requirements and other bank-specific factors on African banks’ capital structure and ascertained which of these factors ultimately determines the capital structure decision.
Motivation for the study: There is limited evidence of study conducted on banks’ capital structure determinants within the Basel III Accord framework in Africa.
Research approach/design and method: This study employed panel data drawn from 45 listed banks from 6 African nations. The panel data regression model was fitted with the system generalised moment methods estimator.
Main findings: The findings revealed that within a similar economic condition in the sampled African nations, the Basel III minimum capital requirements, bank risk and size play the most important role in shaping the observed capital structure decisions of African banks.
Practical/managerial implications: The regulators including central and reserve banks of the sampled African nation, and CEOs should keep their leverage ratio within the Basel III leverage ratio threshold to monitor and curb the build-up of excess leverage and also pay significant attention to the minimum capital requirements, bank risk and size in order to have an optimum capital mix.
Contribution/value add: The Basel III Accord has significant importance in the financing decisions of African banks as much as the bank-specific factors. |
| first_indexed | 2024-04-13T16:26:34Z |
| format | Article |
| id | doaj.art-2db84e18c901451a80b8d43085a11298 |
| institution | Directory Open Access Journal |
| issn | 1995-7076 2312-2803 |
| language | English |
| last_indexed | 2024-04-13T16:26:34Z |
| publishDate | 2022-10-01 |
| publisher | AOSIS |
| record_format | Article |
| series | Journal of Economic and Financial Sciences |
| spelling | doaj.art-2db84e18c901451a80b8d43085a112982022-12-22T02:39:43ZengAOSISJournal of Economic and Financial Sciences1995-70762312-28032022-10-01151e1e1410.4102/jef.v15i1.742472The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors?Ayodeji M. Obadire0Vusani Moyo1Ntungufhadzeni F. Munzhelele2Department of Accountancy, Faculty of Management, Commerce and Law, University of Venda, Thohoyandou, South Africa; and, Department of Professional Accounting, School of Finance and Professional Studies, Botswana Accountancy College, GaboroneDepartment of Accountancy, Faculty of Management, Commerce and Law, University of Venda, ThohoyandouDepartment of Accountancy, Faculty of Management, Commerce and Law, University of Venda, ThohoyandouOrientation: The decision to have an optimum mix of capital structure is an issue of concern for financial service firms as much as other firms. Research purpose: The study investigated the impact of the Basel III regulatory requirements and other bank-specific factors on African banks’ capital structure and ascertained which of these factors ultimately determines the capital structure decision. Motivation for the study: There is limited evidence of study conducted on banks’ capital structure determinants within the Basel III Accord framework in Africa. Research approach/design and method: This study employed panel data drawn from 45 listed banks from 6 African nations. The panel data regression model was fitted with the system generalised moment methods estimator. Main findings: The findings revealed that within a similar economic condition in the sampled African nations, the Basel III minimum capital requirements, bank risk and size play the most important role in shaping the observed capital structure decisions of African banks. Practical/managerial implications: The regulators including central and reserve banks of the sampled African nation, and CEOs should keep their leverage ratio within the Basel III leverage ratio threshold to monitor and curb the build-up of excess leverage and also pay significant attention to the minimum capital requirements, bank risk and size in order to have an optimum capital mix. Contribution/value add: The Basel III Accord has significant importance in the financing decisions of African banks as much as the bank-specific factors.https://jefjournal.org.za/index.php/jef/article/view/742capital adequacy ratiocapital bufferleverage ratioliquidity coverage ratiopanel datatheories of capital structure |
| spellingShingle | Ayodeji M. Obadire Vusani Moyo Ntungufhadzeni F. Munzhelele The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors? Journal of Economic and Financial Sciences capital adequacy ratio capital buffer leverage ratio liquidity coverage ratio panel data theories of capital structure |
| title | The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors? |
| title_full | The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors? |
| title_fullStr | The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors? |
| title_full_unstemmed | The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors? |
| title_short | The determinant of African banks’ capital structure: Basel III Accord or bank-specific factors? |
| title_sort | determinant of african banks capital structure basel iii accord or bank specific factors |
| topic | capital adequacy ratio capital buffer leverage ratio liquidity coverage ratio panel data theories of capital structure |
| url | https://jefjournal.org.za/index.php/jef/article/view/742 |
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