Capital Structure and Financial Performance of Commercial Banks in Ghana | Chapter 2 | Business, Management and Economics - Research Progress Vol. 1

 

This paper investigates the impact of capital structure on the financial performance of commercial banks in Ghana for the period, 2008-2022. The methodology involves a robust analytical framework using econometric models, particularly the Panel Autoregressive Distributed Lag (P-ARDL) regression model enabling a thorough examination of the complex interactions between capital structure and bank performance. Spanning five listed banks over a 15-year period for which consistent data is available, panel-data econometric modelling was used to accommodate individual heterogeneity. The findings reveal a significant long-run positive impact of capital structure on financial performance, suggesting that optimal capital structure can enhance bank performance in the long run. In the short run, capital structure contemporaneously and sluggishly impacts ROA negatively, but with only a weak negative sluggish effect on ROE. The results further highlight the significant long-run detrimental effect of bank size and the robust positive long-run effect of bank growth on the financial performance of banks. The paper recommends a strategic focus on optimising capital structure to enhance the long-run financial performance of Ghanaian commercial banks thereby underscoring the importance of considering internal factors in capital structure decisions. This study contributes to the global discourse on capital structure, offering fresh perspectives from an underdeveloped economic context.

 

Author(s) Details

 

Deodat E. Adenutsi
Department of Accounting and Finance, HTU Business School, Ho Technical University, Ho, Ghana.

 

Please see the link:- https://doi.org/10.9734/bpi/bmerp/v1/880

The Relationship of Assets with Liabilities and Capital or Owners Equity: Evidence of Companies Listed on Dar es Salaam Stock Exchange, Tanzania | Chapter 1 | Business, Management and Economics: Research Progress Vol. 2

 

The accounting equation shows the equality or relationship between company assets, liabilities, and capital or owner’s equity. This article attempts to explain how an accounting equation evolves due to the complex behaviors of managers in decision-making making specifically capital structure decisions. The article looks at the accounting equation by using trade-off theory and positive accounting theory lenses. The accounting equation is viewed as living or dynamic and changes according to human behavior or managers of a company’s behavior. The article focuses on all 15 companies listed on the Dar Salaam Stock Exchange (DSE) from the year 2005 to 2008 when Tanzania effectively adopted IASs. Annual reports of companies were used to obtain data from 2005 through 2008. The values of total assets, liabilities, and owners’ equity or capital were obtained from the companies’ statements of financial position and regressed together. The regression model and descriptive statistics were used to show the relationship between total assets, liabilities, and owners’ equity. The model was then used to show a new form of the accounting equation, rates of change of liabilities, and owners’ equity. In this article, the new approaches or look at the accounting equation and the rates of change of liabilities and capital in relation to assets were found and shows the proportion of the two components of assets i.e. liability 64% and capital 36% to the asset. Finally, the author explains the constant term which is not explained by other authors of the accounting field. This article shows for the first time a new form of accounting equation, different rates of change for the two components of assets, and finally proportions of the owners’ equity/ capital and liabilities components on assets. Future researchers should find out how the accounting equation evolves, how total liabilities of companies (L) and companies’ owners’ equity (C) change in relation to total assets as well as the proportion of L and C to the total assets in specific industries and should also define the optimal point where capital equals to liability.

 

 

Author(s) Details

Ntui Ponsian Prot
St. Augustine University of Tanzania, Mwanza, Tanzania.

 

Please see the book here:- https://doi.org/10.9734/bpi/bmerp/v2/2980G

An Empirical Study Evaluating the Role of Capital Structure on Financial Performance and Sustainability of Microfinance Institutions (MFIs) in Ghana | Chapter 2 | Contemporary Research in Business, Management and Economics Vol. 1

In Ghana, MFIs have risen to prominence as crucial lending institutions in the development process as they offer financial services to the poor. Microfinance is defined as the provision of savings and loans to low-income clients. The study examines the effect of capital structure on the financial performance and sustainability of Microfinance Institutions in Ghana. We investigate the role of debt-to-equity ratio, equity-to-asset ratio, and deposit-to-loan ratio in guaranteeing financial performance and sustainability. Secondary data was collected from the MFIs licensed by the Bank of Ghana. We implement multiple regression methods to investigate the relationship between the observed performance indicators and a set of explanatory variables. The empirical analysis involves 51 Ghanaian MFIs reporting on the MIX market. We find strong empirical support for the notion that asset size is significantly and positively related to asset returns, self-sufficiency, and financial sustainability. Additionally, capital structure variables are strongly associated with profitability but exert insignificant impacts on the operational self-sufficiency and financial instability of MFIs. The macroeconomic environment also matters to the profitability, self-sufficiency, and sustainability of MFIs. The ability of the MFIs to improve security and lessen the risk is critical in ensuring profit efficiency and self-sufficiency. A stable macroeconomic environment is essential to enhancing the financial performance and sustainability of MFIs.

Author(s) Details:

Rowland Seyram Koku Dabi,
Faculty of Finance and Economics Education, School of Management Studies, Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia.

Nugraha,
Faculty of Management, Financial Management, Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia.

Disman,
Management Science, Public Finance, Economics and Finance Banking Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia.

Maya Sari,
Faculty of Economics and Business Education, Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia.

Please see the link here: https://stm.bookpi.org/CRBME-V1/article/view/13487

Investigating the Impact of Leverage and Managerial Skills on Firm Performance | Chapter 3 | Selected Topics in Humanities and Social Sciences Vol. 8

 The purpose of this study is to see how leverage and managerial abilities affect shareholder returns. The share of debt in the total capital structure of the company is particularly important in this study. Leverage is calculated using total debt and long-term debt. The managerial abilities of each company's CEO are assessed based on his or her degree and experience. The return on equity is used to determine how much a stockholder's investment is worth. Different capital structures are used by different organisations, and it is challenging for a manager to determine which capital structure minimises risk and expense while maximising shareholder wealth and firm value. I performed panel data analysis on a sample of 25 companies from 2009 to 2014 for this investigation. Companies from Pakistan's agricultural industry were picked. A significant and positive association exists between a firm's total debt and return on equity, according to the findings of panel data analysis. Similarly, there is a strong and negative association between a company's total debt and return on equity, according to the data. The CEO's education and experience are found to have a strong and favourable association with return on equity. Return on equity, on the other hand, has a negative but significant link with long-term debt. According to the findings, a company's return to shareholders decreases as its debt increases. Increasing just long-term debt diminishes stockholder returns in the same way.

Author(S) Details

Syed Amad Nadeem
Foundation University Islamabad, Pakistan.

View Book:- https://stm.bookpi.org/STHSS-V8/article/view/4766

Impact of International Rating Agencies in Iberian Private Companies | Chapter 8 | Modern Perspectives in Economics, Business and Management Vol. 5

 Although not adequately addressed in recent research, the impact of international rating agencies handling political risk in Iberian private enterprises is a critical element for corporate capital structure and leverage decisions. The financial crisis of the new century, combined with international rating agencies' downgrading of Portugal, increased concerns about the influence of political risk on company financing and how changes in political risk can affect managers' perceptions of the capital structure of their companies. From 2003 to 2015, the time span was chosen to include recent and large financial crises that had an impact on the country's political risk change. The results were determined through an empirical research using a novel econometric model, starting with correlations between Leverage and variables Return on Assets, Return on Equity, Dimension, Tangibility, Sales Variation, Political Risk, and Critical Political Risk. Critical Political Risk is a dummy variable according to the Credit Rating Agencies' notations. We look at how this notation affects domestic political risk as well as the capital structure of businesses, taking into account the impact of this international notation. Evidence supported our hypothesis: as political risk increased, leverage decreased. Determining how CPR affects each firm, evaluating risk per company, and analysing the impact of Rating Notation on financing decisions in private enterprises from the Iberian Market are among the other research topics.

Author (S) Details

Vasco Soares
Instituto Superior do Vouga, Santa Maria da Feira, Porto, Portugal.

Sónia Carvalho
Instituto Politécnico de Viana do Castelo, Valença, Portugal.

Mafalda Mendes-Ribeiro
Departamento de Economia e Gestão, Universidade Portucalense, Porto, Portugal.

View Book :- https://stm.bookpi.org/MPEBM-V5/article/view/3332

Recent Perspectives of the Impact of Financial Structure on Return on Equity: Evidence from Wholesale of Motor Vehicle Parts and Accessories Industry | Chapter 12 | Current Strategies in Economics and Management Vol.4

A widely debated topic during the last years is represented by the choice of financial structure of companies, especially in developing or emerging countries, characterized by economies without a tough and a mature financial system. The purpose of this research is to determine whether there is a relationship between capital structure and firm performance of firms active in Romania in the wholesale of motors vehicle parts and accessories (NACE 4531). Capital structure refers to how a firm chooses to finance their assets and future growth by dividing debt into subcategories (bank, commercial) and time horizon, while firm performance is evaluated by the return on equity (financial return). By determining this relationship, firms in these sectors should have a better understanding of how to select the financing for their future growth. The main output of the study consists in the fact that the financial structure divided by debt components of the companies does not influence significantly the return on equity during periods of low interest rates, like the case of Romania during 2016.

Author (s)  Details

 Mrs. Rodica Baciu
The Bucharest University of Economic Studies, Romania.

Professor Brezeanu Petre
The Bucharest University of Economic Studies, Romania.

View Book :- http://bp.bookpi.org/index.php/bpi/catalog/book/198

Tax Rates Effects on the Risk Level of Listed Viet Nam Human Resource and Medical Equipment Firms during Global Economic Crisis 2007-2009 | Chapter 11 | Current Strategies in Economics and Management Vol. 2

The emerging stock market in Viet Nam has been developed since 2006 and affected by the financial crisis 2007-2009. This study analyzes the impacts of tax policy on market risk for the listed firms in the stock investment industry as it becomes necessary.  First, by using quantitative and analytical methods to estimate asset and equity beta of total 9 listed companies in Viet Nam stock investment industry with a proper traditional model, we found out that the beta values, in general, for many institutions are acceptable. Second, under 3 different scenarios of changing tax rates (20%, 25% and 28%), we recognized that there is not large disperse in equity beta values, estimated at 0,512, 0,513 and 0,513. Third, by changing tax rates in 3 scenarios (25%, 20% and 28%), we recognized both equity and asset beta mean values have positive relationship with the increasing levels of tax rate. Finally, this paper provides some outcomes that could provide companies and government more evidence in establishing their policies in governance.

Author(s) Details

Dinh Tran Ngoc Huy
Banking University, Ho Chi Minh City, Vietnam and Graduate School of International Management, International University of Japan, Niigata, Japan.

Pham Tuan Anh
Thuongmai University, Hanoi, Vietnam.