Factors Affecting Capital Structure Decision the Case of Private Commercial Banks in Ethiopia
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Date
2008-06
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A.A.U
Abstract
This research paper presents the factors affecting capital structure
decisions of private commercial banks in Ethiopia. The study was
conducted mainly on sets of data that were collected from the six private
banks infive consecutive years (2003 - 2007) and by conducting interview
with the financial managers of the six pri:1ate commercial banks; AlB,
BOA, DB, NIB, UB and WB, which could pro:;ide the pertinent and
necessary data existing at least during the last five yeo.rs.
The collected data were analyzed using the pooled tir,'e-series correlation.
The mean values of the dependent variable (cauital structure) are
correlated with the mean values of the independent variables. The study
has also inculcated in the analysis the primary data obtained by
conducting interview with the financial officers and banking supervisors.
The results from the analysis has emphasized on two findings: the first
has identified the major factors affecting the control steractur decision of
the selected private commercial banks. '"he second finding has justified the
relationship (positive or negative) between the factors affecting capital
structure decision such as financial risk, profitabilit ) . tax-shield, asset
composition, and dilution of control, with debt -to- equity ratio i. e. the
measure of capital structure. Based on, analysis , conclusions and
recommendations were forwarded
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Keywords
Capital, Structure