Abstract
This study aims to examine the impact of capital structure on bank performance. This research verified the existence of several relationships between capital structure as measured by LAR, EAR, and Total Debt ratio on bank’s performance as measured by ROA and ROE, EPS, and NPM. Using the panel data of bank from 2010 to 2019, In Islamic banks , the results of the present study revealed that the contributions of the capital structure to ROA were significant. This result was in line with the findings of the past studies. For instance, El-Chaarani and El-Abiad (2019) found that positive and significant impacts of short-term debt and total debt on the return on equity of the banking sector in Middle East region, a negative and significant impacts of short-term debt and total debt on the return on assets, and a positive impact of long-term debt on the return on assets ratio. In commercial banks sector the regression analysis revealed that the contributions of the three independent variables to the EPS were non-significant. Also, the contributions of the total debt and LAR to the independent variables ROE were significant. In contrast, the contribution of the EAR to the independent variable ROE was non-significant. Moreover, the contribution of the LAR to NPM was significant. Also, the contributions of the EAR and the total debt to NPM were non-significant. Furthermore, the contributions of the LAR and EAR to ROA were significant. In contrast, the contribution of the total debt to ROA was non-significant. In general, the contributions of the LAR and EAR to ROA were significant.
Highlights
Banks are essential in economic life because they are the foundation of the modern financial system, and international trade cannot be imagined without them
Data analysis (t-test, descriptive and regression analysis) revealed: (1) a similarity of capital structure of Islamic banks and Conventional banks in Gulf Countries; (2) return of asset significantly and negatively related to financial leverage and a positively related to equity to assets ratio in Islamic and Conventional banks; and (3) bank size has a positive relationship with return on equity and return of asset as performance measures in Islamic and Conventional banks
It was observed that the total debt negatively and significantly related to ROE, NPM, and ROA
Summary
Banks are essential in economic life because they are the foundation of the modern financial system, and international trade cannot be imagined without them. Capital Structure and Bank Performance of Islamic and Commercial in Yemen. The liabilities side of the balance sheet is represented by the financing structure in the financial statements, which includes equity (internal financing), long-term liabilities (external funding), and current liabilities. Companies seek to reduce costs and increase profits by managing the financing structure, as corporate finance necessitates a balance of internal and external financing. The measurement of the bank's financial performance serves as the foundation for investment and financing decisions. Investors are interested in evaluating the bank's performance to determine the management's success in applying their capital, which represents equity. The capital structure refers to the method, and sources of financing, Total debt, Total Liabilities to Total Assets Ratio (LAR), and Equity to Total Assets Ratio (ETAR) will be used to calculate capital structure (EAR)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
