The effect of capital structure on profitability of financial institutions: Evidence from selected banks listed in the Philippine Stock Exchnage for the period of 2003-2012

• Main Authors: Bona, Michelle, Medina, Kathryn, Sze, Jackyson, Yamsuan, Maritoni
• Format: text
• Language: English
• Published: Animo Repository 2013
• Subjects: Banks and banking > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6305
• Institution: De La Salle University

This study investigated whether or not capital structure have an impact on profitability of financial institutions. A panel data of twelve banks listed in the Philippine Stock Exchange over a ten-year period from 2003 to 2012 was used in estimating the functions relating profitability (i.e. return on equity and return on assets) with capital structure (i.e.l short-term, long-term and total debt to total capital). The empirical results revealed that short-term and long-term debt to total capital has no significant impact on return on equity and return on assets, while total debt to total capital has a significant positive relationship with return on equity and a significant negative relationship with return on assets.