Work

The Determinants of Shariah Banks’ Capital Structure

Year: 2024

Type: article

Abstract: This study is an endeavor to identify key significant determinants of capital structure for Shariah-tagged banks. A total of 47 Shariah banks' nine years i.e. from 2013 to 2021 Balance Panel Data is used. The leverage ratio is nominated as a dependent variable, whereas, liquidity, return on assets, gross domestic product, return on equity, tangibility, growth, size, and capital adequacy ratio are designated as explanatory variables. The Panel Data Static model and Dynamic model via the Generalized Method of Moments (GMM) are executed. The results specify that liquidity, gross domestic product, tangibility, lagged dependent variable, and profitability i.e. measured by return on equity are positively significant determinants. Besides, the significant lagged variable, tangibility, liquidity, and existence of SOA infer the significance of the Dynamic Trade-off theory. Based on the identified significant determinants, the policymakers can develop similar policies to formulate the capital structure of whole Shariah banks.

Source: International Journal of Economics and Financial Issues

DOI: 10.32479/ijefi.16923

Authors: Raja Rehan, Muhammad Asghar Khan, Guo Hong Fu, Auwal Adam Sa’ad, Auroob Irshad

Institutions: International Islamic University Malaysia, ILMA University, Panzhihua University, Iqra University

Language: English

Topic: Islamic Finance and Banking Studies

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $300