Capital Structure and Profitability in Srilankan Banks

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T.Mangaleswaran
T.Mangaleswaran
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J.Aloy Niresh
J.Aloy Niresh
α University of Jaffna

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Capital Structure and Profitability in Srilankan Banks

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Abstract

Capital structure has attracted intense debate and scholarly attention across industries in the corporate finance literature over the past decades. Nonetheless, in the context of the banking industry, the subject has received a limited research attention. Capital structure decision is the vital one since the profitability of an enterprise is directly affected by such decision. Hence, proper care and attention need to be given while determining capital structure decision. The study investigated the impact of capital structure on profitability of ten listed Srilankan banks over the past 8 year period from 2002 to 2009. Based on the findings of the study, there are a few key points that can be used to conclude this study. It is very important that the total debt is the determining factor of profitability in the Banking Industry of Sri Lanka. The outcomes of the study may guide banks, loan-creditors and policy planners to formulate better policy decisions as far as the capital structure is concerned. Further, the study reinforces and refines the body of knowledge relating to capital structure and profitability in Srilankan Banks.

References

11 Cites in Article
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  2. A Berger (1995). The relationship in Banking-Tests of Market power and Efficient market Hypotheses.
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  4. F Modigliani,M Miller (1963). Corporate income taxes and the cost of capital: A Correction.
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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

T.Mangaleswaran. 1970. \u201cCapital Structure and Profitability in Srilankan Banks\u201d. Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 12 (GJMBR Volume 12 Issue B13): .

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GJMBR Volume 12 Issue B13
Pg. 83- 90
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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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Capital structure has attracted intense debate and scholarly attention across industries in the corporate finance literature over the past decades. Nonetheless, in the context of the banking industry, the subject has received a limited research attention. Capital structure decision is the vital one since the profitability of an enterprise is directly affected by such decision. Hence, proper care and attention need to be given while determining capital structure decision. The study investigated the impact of capital structure on profitability of ten listed Srilankan banks over the past 8 year period from 2002 to 2009. Based on the findings of the study, there are a few key points that can be used to conclude this study. It is very important that the total debt is the determining factor of profitability in the Banking Industry of Sri Lanka. The outcomes of the study may guide banks, loan-creditors and policy planners to formulate better policy decisions as far as the capital structure is concerned. Further, the study reinforces and refines the body of knowledge relating to capital structure and profitability in Srilankan Banks.

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Capital Structure and Profitability in Srilankan Banks

J.Aloy Niresh
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