The impact of the capital structure on Iraqi banks’ performance

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The current paper aims to investigate the effect of the capital structure on the profitability of a panel of eighteen Iraqi listed banks from 2009 to 2018. Furthermore, the unbalanced panel data approach (fixed effect and random effect) is utilized to explore the influence of capital structure on banks’ profitability. This study’s findings point out that the banks’ performance in terms of return on assets has a significant positive association with equity to assets ratio, liabilities to assets ratio, and bank size. On the other hand, long-term debt to assets ratio, short-term debt to assets ratio, and total debt to assets ratio showed a significant negative effect on banks’ performance. This study highlights new facts for an enhanced understanding of the capital structure and its association with banks’ performance in developing economies like Iraq. This study is considered one of the earliest studies of its types by determining the Iraqi banks’ optimal structure and examining capital structure’s impact on their performance. Nevertheless, the study contributes significantly to theoretical literature, policymakers, and industry so that conventional Iraqi banks can boost their performance.

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    • Table 1. The study variables summary
    • Table 2. Descriptive statistics
    • Table 3. Pearson correlation matrix
    • Table 4. The influence of the capital structure on banks’ performance measured by ROA
    • Table 5. The impact of the capital structure on banks’ performance measured by ROE
    • Data curation
      Hamid Mohsin Jadah, Noor Hashim Mohammed Al-Husainy
    • Formal Analysis
      Hamid Mohsin Jadah, Aya Adel Hassan, Teba Majed Hameed, Noor Hashim Mohammed Al-Husainy
    • Funding acquisition
      Hamid Mohsin Jadah, Aya Adel Hassan, Teba Majed Hameed
    • Investigation
      Hamid Mohsin Jadah
    • Methodology
      Hamid Mohsin Jadah, Noor Hashim Mohammed Al-Husainy
    • Project administration
      Hamid Mohsin Jadah
    • Resources
      Hamid Mohsin Jadah, Aya Adel Hassan, Teba Majed Hameed
    • Software
      Hamid Mohsin Jadah, Aya Adel Hassan, Teba Majed Hameed, Noor Hashim Mohammed Al-Husainy
    • Supervision
      Hamid Mohsin Jadah
    • Validation
      Hamid Mohsin Jadah
    • Visualization
      Hamid Mohsin Jadah
    • Writing – original draft
      Hamid Mohsin Jadah
    • Writing – review & editing
      Hamid Mohsin Jadah, Aya Adel Hassan, Teba Majed Hameed, Noor Hashim Mohammed Al-Husainy