Impact of capital structure on profitability of universal banks in Ghana
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Date
2021
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knust
Abstract
This study focused on the impact of capital structure on some listed state banks and private banks in Ghana with regards to profitability. This study adopted a descriptive research design with quantitative approach. The study population covered the nine universal bank that have data on their published annual statements for the period 2000 to 2010 within Ghana. Panel data for the selected companies were analyzed using fixed effect regression statistical technique to test the relationship between capital structure variables and return on asset (roa) and random effect used to test the relationship between capital structure variables and return on equity (roe). Other statistical methods of partial correlation and summary of descriptive statistics were also used to analyze the study results. Variable computations were done with the assistance of Stata computer software. The statistical method used to test these effects is the fixed effects model. The results show that the total debt-to-equity ratio (tde) and the total debt to tangible assets ratio (tdta) are statistically significant and negatively correlated with performance, while roce and bank scale are statistically significant, and the independent variable (performance) is positively correlated.