The Capital Structure Decisions of Banks: An Evidence From MENA Region
The study examines the significant factors affecting the capital structure decisions for banks’ in MENA region. An unbalanced panel data comprising of 132 banks operating in fifteen different countries of the MENA region from 2012 to 2017, data was extracted from Bank Scope resulting in 891 bank yea...
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
SAGE Publishing
2023-12-01
|
| Series: | SAGE Open |
| Online Access: | https://doi.org/10.1177/21582440231204600 |
| _version_ | 1797389104466362368 |
|---|---|
| author | Shoaib Khan Usman Bashir Hend Abdulhadi Saleh Attuwaijri Usman Khalid |
| author_facet | Shoaib Khan Usman Bashir Hend Abdulhadi Saleh Attuwaijri Usman Khalid |
| author_sort | Shoaib Khan |
| collection | DOAJ |
| description | The study examines the significant factors affecting the capital structure decisions for banks’ in MENA region. An unbalanced panel data comprising of 132 banks operating in fifteen different countries of the MENA region from 2012 to 2017, data was extracted from Bank Scope resulting in 891 bank year observations. Macroeconomic indicators and institutional characteristics data has been taken from World Bank and World Bank governance indicators database and financial freedom data has been collected from heritage foundation. We use the two-step system Generalized Method of Moments (GMM) to explore the relationship between dependent and explanatory variables. The regression outcome between profitability and leverage shows a negative and significant relationship. No significant association between tangibility and leverage is found. Earnings volatility is negatively and significantly related to leverage. The relationship between growth and leverage is negative and significant. Macroeconomic indicators GDP growth and inflation show a positive relationship with leverage. Finally, the institutional factors, that is, government effectiveness, political stability, and rule of law have positive association with leverage. The study results will lend a hand to bank managers to make value-maximizing financing decisions to achieve an optimal capital structure. It will also help the policymakers to articulate an effective regulatory framework in the region. As per our knowledge, this is the first study to explore the determining factors of capital structure for banks operating in the MENA region. Moreover, the findings from MENA region banks could also support the comparative study with other regional blocks. |
| first_indexed | 2024-03-08T22:51:00Z |
| format | Article |
| id | doaj.art-c3792b9013134641b68100ee538b8f50 |
| institution | Directory Open Access Journal |
| issn | 2158-2440 |
| language | English |
| last_indexed | 2024-03-08T22:51:00Z |
| publishDate | 2023-12-01 |
| publisher | SAGE Publishing |
| record_format | Article |
| series | SAGE Open |
| spelling | doaj.art-c3792b9013134641b68100ee538b8f502023-12-16T16:04:03ZengSAGE PublishingSAGE Open2158-24402023-12-011310.1177/21582440231204600The Capital Structure Decisions of Banks: An Evidence From MENA RegionShoaib Khan0Usman Bashir1Hend Abdulhadi Saleh Attuwaijri2Usman Khalid3College of Business Administration, University of Ha'il, Saudi ArabiaDepartment of Economics and Finance, College of Business Administration, University of Bahrain, Sakhir, BahrainCollege of Business, Al Imam Mohammad Ibn Saud Islamic University, Riyadh, Saudi ArabiaGuangzhou City Construction College, Guangzhou City, Guangdong Province, PR ChinaThe study examines the significant factors affecting the capital structure decisions for banks’ in MENA region. An unbalanced panel data comprising of 132 banks operating in fifteen different countries of the MENA region from 2012 to 2017, data was extracted from Bank Scope resulting in 891 bank year observations. Macroeconomic indicators and institutional characteristics data has been taken from World Bank and World Bank governance indicators database and financial freedom data has been collected from heritage foundation. We use the two-step system Generalized Method of Moments (GMM) to explore the relationship between dependent and explanatory variables. The regression outcome between profitability and leverage shows a negative and significant relationship. No significant association between tangibility and leverage is found. Earnings volatility is negatively and significantly related to leverage. The relationship between growth and leverage is negative and significant. Macroeconomic indicators GDP growth and inflation show a positive relationship with leverage. Finally, the institutional factors, that is, government effectiveness, political stability, and rule of law have positive association with leverage. The study results will lend a hand to bank managers to make value-maximizing financing decisions to achieve an optimal capital structure. It will also help the policymakers to articulate an effective regulatory framework in the region. As per our knowledge, this is the first study to explore the determining factors of capital structure for banks operating in the MENA region. Moreover, the findings from MENA region banks could also support the comparative study with other regional blocks.https://doi.org/10.1177/21582440231204600 |
| spellingShingle | Shoaib Khan Usman Bashir Hend Abdulhadi Saleh Attuwaijri Usman Khalid The Capital Structure Decisions of Banks: An Evidence From MENA Region SAGE Open |
| title | The Capital Structure Decisions of Banks: An Evidence From MENA Region |
| title_full | The Capital Structure Decisions of Banks: An Evidence From MENA Region |
| title_fullStr | The Capital Structure Decisions of Banks: An Evidence From MENA Region |
| title_full_unstemmed | The Capital Structure Decisions of Banks: An Evidence From MENA Region |
| title_short | The Capital Structure Decisions of Banks: An Evidence From MENA Region |
| title_sort | capital structure decisions of banks an evidence from mena region |
| url | https://doi.org/10.1177/21582440231204600 |
| work_keys_str_mv | AT shoaibkhan thecapitalstructuredecisionsofbanksanevidencefrommenaregion AT usmanbashir thecapitalstructuredecisionsofbanksanevidencefrommenaregion AT hendabdulhadisalehattuwaijri thecapitalstructuredecisionsofbanksanevidencefrommenaregion AT usmankhalid thecapitalstructuredecisionsofbanksanevidencefrommenaregion AT shoaibkhan capitalstructuredecisionsofbanksanevidencefrommenaregion AT usmanbashir capitalstructuredecisionsofbanksanevidencefrommenaregion AT hendabdulhadisalehattuwaijri capitalstructuredecisionsofbanksanevidencefrommenaregion AT usmankhalid capitalstructuredecisionsofbanksanevidencefrommenaregion |