FACTORS AFFECTING CAPITAL STRUCTURE OF THE BANKS LISTED ON IRAQI STOCK EXCHANGE (2009-2014)

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Renas I. Mohammed Kovan M. A. Gawdan Islam S. T. Babela

Abstract

The current study aims to examine the factors affecting capital structure of (16) banks listed on the Iraqi Stock Exchange (ISX) during the period 2009 to 2014.  Several factors could have an impact on capital structure. While, this study concentrates on four characteristics of Iraqi banks and attempts to identify their effect on financing decision of these banks. Growth, profitability, liquidity and size have been used as independent variables. However, the study depends on leverage as a dependent variable to measure the capital structure of banks. Using a multiple linear regression model by (SPSS) program different results have been revealed. The findings show that growth is not one of the determinants of capital structure and it has no effect on the leverage of these banks at all. While, there is a statistically negative relationship of capital structure choice with profitability and liquidity. On the other hand, the findings indicate that the size affects capital structure of the banks positively and significantly. The study could have a great contribution to financing decision of the banks listed on ISX for choosing the optimal capital structure.

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