Capital structure and profitability of selected universal banks in the Philippines

The banking industry has a significant part in the economy of either a developing or a fully developed country. Banking systems promote a country’s growth. In turn, this growth can be attained by turning savings into sound investment. This is why the researcher wants to examine the relationship betw...

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Main Author: Lim, Edralin C.
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Published: Animo Repository 2015
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Online Access:https://animorepository.dlsu.edu.ph/faculty_research/6722
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Institution: De La Salle University
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spelling oai:animorepository.dlsu.edu.ph:faculty_research-74992022-09-10T06:21:57Z Capital structure and profitability of selected universal banks in the Philippines Lim, Edralin C. The banking industry has a significant part in the economy of either a developing or a fully developed country. Banking systems promote a country’s growth. In turn, this growth can be attained by turning savings into sound investment. This is why the researcher wants to examine the relationship between capital structure and profitability of the banking industry, specifically the universal banks. The researcher based his sample on eleven universal banks in the Philippines from 2006 to 2013. The study used correlation analysis to determine the relationship between capital structure and profitability. To assess the bank’s profitability, return on equity was used. On the other hand, debt to equity ratio and debt to asset ratio were used to measure capital structure. The study showed that debt to equity ratio and debt to asset ratio have a significant positive relationship with return on equity. Evidently, higher leverage profoundly leads to higher profitability – which is encompassed by the concept of moderate view. Moreover, as tax savings are taken advantage by banks, the concept of static trade-off was actually validated. Hence, increasing the net income. Furthermore, it connoted that profitable banks depend severely on debt rather than equity to finance their assets. Overall, the study confirmed that the decisions on how banks manage their resources and capital structure will always be significantly related to profitability. 2015-01-01T08:00:00Z text https://animorepository.dlsu.edu.ph/faculty_research/6722 Faculty Research Work Animo Repository Bank capital—Philippines Bank profits—Philippines Universal banks—Philippines Finance and Financial Management
institution De La Salle University
building De La Salle University Library
continent Asia
country Philippines
Philippines
content_provider De La Salle University Library
collection DLSU Institutional Repository
topic Bank capital—Philippines
Bank profits—Philippines
Universal banks—Philippines
Finance and Financial Management
spellingShingle Bank capital—Philippines
Bank profits—Philippines
Universal banks—Philippines
Finance and Financial Management
Lim, Edralin C.
Capital structure and profitability of selected universal banks in the Philippines
description The banking industry has a significant part in the economy of either a developing or a fully developed country. Banking systems promote a country’s growth. In turn, this growth can be attained by turning savings into sound investment. This is why the researcher wants to examine the relationship between capital structure and profitability of the banking industry, specifically the universal banks. The researcher based his sample on eleven universal banks in the Philippines from 2006 to 2013. The study used correlation analysis to determine the relationship between capital structure and profitability. To assess the bank’s profitability, return on equity was used. On the other hand, debt to equity ratio and debt to asset ratio were used to measure capital structure. The study showed that debt to equity ratio and debt to asset ratio have a significant positive relationship with return on equity. Evidently, higher leverage profoundly leads to higher profitability – which is encompassed by the concept of moderate view. Moreover, as tax savings are taken advantage by banks, the concept of static trade-off was actually validated. Hence, increasing the net income. Furthermore, it connoted that profitable banks depend severely on debt rather than equity to finance their assets. Overall, the study confirmed that the decisions on how banks manage their resources and capital structure will always be significantly related to profitability.
format text
author Lim, Edralin C.
author_facet Lim, Edralin C.
author_sort Lim, Edralin C.
title Capital structure and profitability of selected universal banks in the Philippines
title_short Capital structure and profitability of selected universal banks in the Philippines
title_full Capital structure and profitability of selected universal banks in the Philippines
title_fullStr Capital structure and profitability of selected universal banks in the Philippines
title_full_unstemmed Capital structure and profitability of selected universal banks in the Philippines
title_sort capital structure and profitability of selected universal banks in the philippines
publisher Animo Repository
publishDate 2015
url https://animorepository.dlsu.edu.ph/faculty_research/6722
_version_ 1767196595730776064