IDEAS home Printed from https://ideas.repec.org/a/lrc/larijb/v7y2017i8p1-11.html
   My bibliography  Save this article

A Comparative Analysis between Commercial Banks and Insurance Companies in Bangladesh on the basis of Capital Structure

Author

Listed:
  • Shakila Zerin Bony

    (Department of Business Administration, Stamford University Bangladesh.)

  • Md. Moniruzzaman

    (Department of Business Administration, Stamford University Bangladesh)

Abstract

This research aims to compare the capital structure of Bangladeshi commercial banks and insurance companies. This research tries to identify how debt-equity mix influences firm performance in banks and insurance companies in Bangladesh. The annual financial statements of 10 commercial banks and 10 insurance Companies were used for this study which covers a period of five (5) years from 2011-2015. The study assesses the capital structure of the commercial banks and insurance companies measured by total debt to equity ratio (DER), total debt to total funds ratio and performance by ROE, ROA, and EPS. Descriptive statistics, t-test have been used to show the differences between commercial banks and insurance companies capital structure and performance. However this study concludes that there is no significant difference between Bank and insurance companies EPS& ROE but there is a significant difference between Bank and insurance company’s D/A ratio, D/E ratio and ROA. We have tried to find out the significances of capital structure on depository and non-depository financial institutions from this study.

Suggested Citation

  • Shakila Zerin Bony & Md. Moniruzzaman, 2017. "A Comparative Analysis between Commercial Banks and Insurance Companies in Bangladesh on the basis of Capital Structure," International Journal of Business and Social Research, LAR Center Press, vol. 7(8), pages 1-11, August.
    • Handle: RePEc:lrc:larijb:v:7:y:2017:i:8:p:1-11
    as

    Download full text from publisher

    File URL: http://thejournalofbusiness.org/index.php/site/article/view/1067/661
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Huang, Guihai & Song, Frank M., 2006. "The determinants of capital structure: Evidence from China," China Economic Review, Elsevier, vol. 17(1), pages 14-36.
    2. Eugene F. Fama, 2002. "Testing Trade-Off and Pecking Order Predictions About Dividends and Debt," The Review of Financial Studies, Society for Financial Studies, vol. 15(1), pages 1-33, March.
    3. Charles J. Hadlock & Christopher M. James, 2002. "Do Banks Provide Financial Slack?," Journal of Finance, American Finance Association, vol. 57(3), pages 1383-1419, June.
    4. Gleason, Kimberly C. & Mathur, Lynette Knowles & Mathur, Ike, 2000. "The Interrelationship between Culture, Capital Structure, and Performance: Evidence from European Retailers," Journal of Business Research, Elsevier, vol. 50(2), pages 185-191, November.
    5. Harris, Milton & Raviv, Artur, 1991. "The Theory of Capital Structure," Journal of Finance, American Finance Association, vol. 46(1), pages 297-355, March.
    6. Chakraborty, Indrani, 2010. "Capital structure in an emerging stock market: The case of India," Research in International Business and Finance, Elsevier, vol. 24(3), pages 295-314, September.
    7. Margaritis, Dimitris & Psillaki, Maria, 2010. "Capital structure, equity ownership and firm performance," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 621-632, March.
    8. Krishnan, V. Sivarama & Moyer, R. Charles, 1997. "Performance, capital structure and home country: An analysis of Asian corporations," Global Finance Journal, Elsevier, vol. 8(1), pages 129-143.
    9. Chinmoy Ghosh & Raja Nag & C. F. Sirmans, 2000. "The Pricing of Seasoned Equity Offerings: Evidence from REITs," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(3), pages 363-384.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Charles Andoh & Susana Adobea Yamoah, 2021. "Reinsurance and Financial Performance of Non-life Insurance Companies in Ghana," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 46(2), pages 161-174, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shakila Zerin Bony & Md. Moniruzzaman, 2017. "A Comparative Analysis between Commercial Banks and Insurance Companies in Bangladesh on the basis of Capital Structure," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 7(8), pages 1-11, August.
    2. Quan-Hoang Vuong, 2014. "Operational scales, sources of finance, and firms’ performance: evidence from Vietnamese longitudinal data," Working Papers CEB 14-017, ULB -- Universite Libre de Bruxelles.
    3. Omer Bagais & Khaled Aljaaidi & Abdulaziz Alothman, 2021. "An Empirical Investigation of the Associations of Short and Long Debt Policies with Economic Values of Energy Sector," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 249-254.
    4. Le, Thi Phuong Vy & Phan, Thi Bich Nguyet, 2017. "Capital structure and firm performance: Empirical evidence from a small transition country," Research in International Business and Finance, Elsevier, vol. 42(C), pages 710-726.
    5. Hayam Wahba, 2014. "Capital structure, managerial ownership and firm performance: evidence from Egypt," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1041-1061, November.
    6. Miguel Acedo-Ramírez & Juan Ayala-Calvo & José Rodríguez-Osés, 2013. "Capital structure of small companies in the Spanish footwear sector: relevant factors," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(2), pages 155-173, June.
    7. M N, Nikhil & S Shenoy, Sandeep & Chakraborty, Suman & B M, Lithin, 2023. "Is the Nexus Between Capital Structure and Firm Performance Asymmetric? An Emerging Market Perspective," MPRA Paper 119669, University Library of Munich, Germany, revised 17 Nov 2023.
    8. Zhang, Dongyang & Liu, Deqiang, 2017. "Determinants of the capital structure of Chinese non-listed enterprises: Is TFP efficient?," Economic Systems, Elsevier, vol. 41(2), pages 179-202.
    9. Mihaela Brindusa TUDOSE, 2012. "Dimensions of the research on capital structure and firm performance," Anale. Seria Stiinte Economice. Timisoara, Faculty of Economics, Tibiscus University in Timisoara, vol. 0, pages 879-886, May.
    10. Yu-Yen Ku & Tze-Yu Yen, 2016. "Heterogeneous Effect of Financial Leverage on Corporate Performance: A Quantile Regression Analysis of Taiwanese Companies," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 19(03), pages 1-33, September.
    11. Mahmoud Al-Rdaydeh & Ammar Yaser Almansour & Mohammad Ahmad Al-Omari, 2018. "Moderating effect of competitive strategies on the relation between financial leverage and firm performance: evidence from Jordan," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 626-641, June.
    12. Evans Akomeah & Paula Bentil & Alhassan Musah, 2018. "The Impact of Capital Structure Decisions on Firm Performance: The Case of Listed Non-Financial Institutions in Ghana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(4), pages 1-15, October.
    13. George Georgakopoulos & Kanellos Toudas & Evangelos I. Poutos & Theodoros Kounadeas & Stefanos Tsavalias, 2022. "Capital Structure, Corporate Governance, Equity Ownership and Their Impact on Firms’ Profitability and Effectiveness in the Energy Sector," Energies, MDPI, vol. 15(10), pages 1-10, May.
    14. Mário Santos & António Moreira & Elisabete Vieira, 2014. "Ownership concentration, contestability, family firms, and capital structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1063-1107, November.
    15. Krishna Dayal Pandey & Tarak Nath Sahu, 2019. "Debt Financing, Agency Cost and Firm Performance: Evidence from India," Vision, , vol. 23(3), pages 267-274, September.
    16. Sjur Westgaard & Amund Eidet & Stein Frydenberg & Thor Christian Grosås, 2008. "Investigating the Capital Structure of UK Real Estate Companies," Journal of Property Research, Taylor & Francis Journals, vol. 25(1), pages 61-87, August.
    17. Zeeshan Ahmed & Qasim Saleem & Abdul Qadir Bhatti & Bilal Ahmed, 2020. "Corporate Leverage Transmission under Information Asymmetry: Evidence from Non-financial Firms of Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 176-184.
    18. Muhammad Yusuf Amin & Amanat Ali & Bashir Khan, 2019. "Capital Structure of Chinese Firms Across different Sectors: Does Ownership Structure Matter?," Global Economics Review, Humanity Only, vol. 4(2), pages 70-82, June.
    19. Vo, Xuan Vinh & Ellis, Craig, 2017. "An empirical investigation of capital structure and firm value in Vietnam," Finance Research Letters, Elsevier, vol. 22(C), pages 90-94.
    20. Allini, Alessandra & Rakha, Soliman & McMillan, David G. & Caldarelli, Adele, 2018. "Pecking order and market timing theory in emerging markets: The case of Egyptian firms," Research in International Business and Finance, Elsevier, vol. 44(C), pages 297-308.

    More about this item

    Keywords

    Capital Structure; EPS; Return on Asset; Return on Equity; Total Debt to Total Equity Ratio (DER); and Total Debt to Total Funds Ratio.;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lrc:larijb:v:7:y:2017:i:8:p:1-11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Al Hossain (email available below). General contact details of provider: http://www.thejournalofbusiness.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.