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The Impact of Capital Structure on Jordanian Banks Performance

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  • Rania Al Omari

    (Accounting department, Applied Science Private University, Amman, Jordan Author-Orchid id: https://orcid.org/0000-0003-1034-6200)

Abstract

Due to the great importance of the financing structure of banks, the impact of capital structure on the financial performance of banks listed on the Amman Stock Exchange has been examined. To achieve the objectives of this study, we have followed the experimental approach. The study relied on financial variables. The Capital Structure has been measured by the ratios of total debt to total assets and total debt to total equity. Both ratios are independent variables. The dependent variable in this study is the financial performance of banks represented by the ratio of return on assets, the ratio of return on equity, the ratio of return on investment, and the ratio of return on share. The study community and sample consisted of twelve commercial banks listed on Amman Stock Exchange (ASE) during the period (2007-2017). Statistical Package for the Social Sciences (SPSS) software was used in testing of research hypotheses. The most important results are that the capital structure has an impact on return on assets (ROA), while it has no impact on return on equity (ROE), return on investment (ROI) and earnings per share (EPS) in Jordanian commercial banks.

Suggested Citation

  • Rania Al Omari, 2021. "The Impact of Capital Structure on Jordanian Banks Performance," Journal of Social Sciences (COES&RJ-JSS), , vol. 10(1), pages 35-47, January.
    • Handle: RePEc:jso:coejss:v:10:y:2021:i:1:p:35-47
    DOI: 10.25255/jss.2021.10.1.35.47
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    References listed on IDEAS

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    1. Beck, Thorsten & Demirgüç-Kunt, Asli & Maksimovic, Vojislav, 2008. "Financing patterns around the world: Are small firms different?," Journal of Financial Economics, Elsevier, vol. 89(3), pages 467-487, September.
    2. Étienne Bordeleau & Christopher Graham, 2010. "The Impact of Liquidity on Bank Profitability," Staff Working Papers 10-38, Bank of Canada.
    3. Raluca-Georgiana Moscu, 2014. "Capital Structure and Corporate Performance of Romanian Listed Companies," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(1), pages 287-292, January.
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