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Unified Journal of Economics and International Finance

November 2015 Vol 1(2), pp. 008-016

Copyright 2015 Unified Journals

Original Research Paper

The Relationship between Capital Structure and Profitability in Commercial Banks: Evidence from Iran

Mostafa Pahlavan1*, MohammadReza Asgari2 and Sareh Pahlavan1

1M.Sc. of Accounting, Islamic Azad University, South of Tehran Branch, Iran.
2Assistant professor of Islamic Azad University, Yadegar Imam Branch, Shahre-rey, Iran.
1M.Sc. of Accounting, Islamic Azad University, South of Tehran Branch, Iran.

Corresponding Author's Email: mostafa_pahlavan@yahoo.com

Accepted 23 July, 2015.


Abstract


This study aims to investigate the relationship between the profitability and the capital structure of banks. The statistical population of this research consists of all public and private banks for a decade from 2003 to 2012. Using the screening method, the sample is comprised of 18 public and private banks. In this study, return on assets, return on equity, and committed net interest margin are selected as dependent variables and debt-to-equity ratio and debt-to-assets ratio are considered as independent variables. This research exploits compilation and panel (board) data with random and fixed effects and data analysis results at the 95% confidence level shows that Debt-to-equity and debt-to-assets have a direct and significant relationship (p<0.05) with return on equity and return on assets. Moreover, results indicate that there is no significant relationship between debt-to-equity and debt-to-assets ratios and the committed net interest margin of the banks.

Keywords: return on equity, return on assets, committed net interest margin, Debt-to-equity, debt-to-assets.

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Cite This Article

Mostafa Pahlavan, MohammadReza Asgari and Sareh Pahlavan. The Relationship between Capital Structure and Profitability in Commercial Banks: Evidence from Iran. Unified Journal of Economics and International Finance. 1(2) 2015 pp. 008-016.




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