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COVID-19 Impact on the Capital Structure of Commercial Banks: Evidence from the Western Balkans

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  • Albina Kalimashi
  • Driton Balaj

Abstract

This study aims to measure the influence of COVID-19 on the capital structure of Western Balkans commercial banks, before and during COVID-19 using annual data for the period 2015 - 2020. Using pooled ordinary least squares regressions, the relationship between bank book leverage as the dependent variable and bank-specific explanatory variables such as profitability, Tier 1 capital, bank size, collateral, earnings volatility, and liquidity is investigated. COVID-19 as an independent variable is also presented in this paper. GDP and inflation are control (constant) variables that influence the outcome. By regressing the panel data, we conclude that the comparison of factors affecting the capital structure of the respective commercial banks, in the form of profitability, leverage ratio, size, collateral, earnings volatility and liquidity, before and during the COVID-19 pandemic, tend to have significantly different values.

Suggested Citation

  • Albina Kalimashi & Driton Balaj, 2023. "COVID-19 Impact on the Capital Structure of Commercial Banks: Evidence from the Western Balkans," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 76-88.
    • Handle: RePEc:bas:econst:y:2023:i:6:p:76-88
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    More about this item

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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