Abstract
We examine the determinants of capital structure and funding sources of 347
large global banks between 1998 and 2016 from 57 countries around the world.
We find that the capital structure of banks does not evolve only as a result of
capital regulations, it is also affected by market forces. We find that bank capital
structure corresponds to corporate finance theory and buffer view and, in
particular, that market‐to‐book ratio, size, and risk are positively related and
that profitability is negatively related to bank leverage. Banks in countries with
higher tax advantages, creditor rights, deposit insurance, and bankruptcy codes
have more leverage, and those bound by common law have less leverage. Size
and country‐level factors are important determinants of sources of financing
large global banks between 1998 and 2016 from 57 countries around the world.
We find that the capital structure of banks does not evolve only as a result of
capital regulations, it is also affected by market forces. We find that bank capital
structure corresponds to corporate finance theory and buffer view and, in
particular, that market‐to‐book ratio, size, and risk are positively related and
that profitability is negatively related to bank leverage. Banks in countries with
higher tax advantages, creditor rights, deposit insurance, and bankruptcy codes
have more leverage, and those bound by common law have less leverage. Size
and country‐level factors are important determinants of sources of financing
| Original language | English |
|---|---|
| Pages (from-to) | 504-532 |
| Number of pages | 29 |
| Journal | International Journal of Finance and Economics |
| Volume | 23 |
| Issue number | 4 |
| Early online date | 30 Jul 2018 |
| DOIs | |
| Publication status | E-pub ahead of print - 30 Jul 2018 |
Bibliographical note
© 2018 John Wiley & Sons, Ltd. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.Keywords
- capital structure, crisis, deposit/nondeposit financing, global banks, speed of adjustment
Profiles
-
Hafiz Al Asad Bin Hoque
- The York Management School - Senior Lecturer - Accounting & Finance, Former employee
Person: Academic