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Analysis of Capital Structure and Performance of Banking Sector in Middle East Countries

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Listed:
  • Hani El-Chaarani

    (Beirut Arab University, Beirut, Lebanon)

  • Zouhour El-Abiad

    (Lebanese University, Lebanon.)

Abstract

Middle East countries during a period of 6 years (between 2011 and 2016). By using 143 banks and 723 observations, the study shows that the capital structure of the banking sector was very volatile during the studied period due to the economic conditions of the region. The results also reveal the existence of positive and significant impacts of total debt and short-term debt on the ROE of the banking sector in Middle East region. However, the results show negative and significant impacts of total debt and short-term debt on the ROA. Additional analysis reveals a positive impact of long-term debt on the ROA ratio. Finally, this study refuses the endogeneity hypothesis of the capital structure and the performance measured by the profitability of the banking sector, and considers that the capital structure design is highly influenced by the decision taken by the international and national regulatory boards.

Suggested Citation

  • Hani El-Chaarani & Zouhour El-Abiad, 2019. "Analysis of Capital Structure and Performance of Banking Sector in Middle East Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 1-11.
    • Handle: RePEc:eco:journ1:2019-02-1
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    References listed on IDEAS

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    Cited by:

    1. Hani El-Chaarani, 2019. "The Impact of Oil Prices on Stocks Markets: New Evidence During and After the Arab Spring in Gulf Cooperation Council Economies," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 214-223.
    2. Hani El-Chaarani & Rebecca Abraham, 2022. "The Impact of Corporate Governance and Political Connectedness on the Financial Performance of Lebanese Banks during the Financial Crisis of 2019–2021," JRFM, MDPI, vol. 15(5), pages 1-18, April.
    3. Hani El-Chaarani, 2019. "The Impact of oil Prices on the Financial Performance of Banking Sector in Middle East Region," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 148-156.

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    More about this item

    Keywords

    Capital Structure; performance; banks; leverage; long and short-term debts.;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • 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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