A study on the influences of capital strcuture on the profitability of selected banks in the Philippines

• Main Authors: Cauyan, Efren Ace, Estopace, Katrina Angeli E., Perez, Jenard Matthew G., Sarmiento, Francesco Lorenzo L.
• Format: text
• Language: English
• Published: Animo Repository 2017
• Subjects: Banks and banking > philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6302
• Institution: De La Salle University

The study conducted analyzes the influence of capital structure on the profitability of the selected banks. The proponents used panel data, composed of values obtained from the financial reports of the banks, covering a period of sixteen (16) years, from 2000-2015. The measures used for capital structure are debt to equity and debt to total funds. For profitability, the measures used were net profit ratio, return on equity, return on capital employed, and net interest margin. Multiple regression was used to measure the relationship. The results of the study reveal that there is a negative significant relationship between debt to total funds and net profit. Long-term debt to equity has a negative significant relationship with net profit ratio, return on capital employed, and return on equity. Lastly, a negative relationship also exists between long-term debt to total funds and return on capital employed. All other relationships were deemed to be insignificant.