Anarfo (2015) studied the determinants of capital structure of banks from 37 countries in the Sub-Saharan region for 7 years from 2000 to 2006. This research used secondary data from the Price Water House Coopers Annual Banking survey. The author used eight independent variables namely profitability, size of a bank, asset tangibility, growth rate of banks, taxes, GDP growth rate, interest rates and inflation rate as the determinants of capital structure and the dependent variable was the leverage ratios which were total debt ratio (TDR), the short-term debt ratio (STDR) and the long-term debt ratio (LTDR). The results showed that, the profitability was significantly affected the leverage (TDR, STDR and LTDR) and this is in line with pecking order theory. Sizes of the bank, growth rate, inflation and asset tangibility were significant in determining the bank’s capital structure. However, taxes interest rates and GDP growth rate were negatively significant with banks capital structure in sub-Sahara Africa.
In conclusion, profitability which has been measured by using return on asset (ROA), asset tangibility, their growth rate and inflation rate were the determinants of banks’ capital structure in Sub-Sahara Africa.Amidu (2007) examined the determinants of capital structure in 19 Ghanaian banks from 1998 to 2003 which the data were collected from Bank of Ghana. This study used three dependent variables namely leverage, short-term leverage and long-term leverage. The independent variables were profitability, risk, asset structure, bank size, growth and corporate tax. Based on this study, a positive relationship has been found between the long-term debt structure and operating assets. As for the short-term debt, it was positively related to bank size, growth and corporate tax; on the other hand, it was negatively related to banks’ profitability, risk and asset structure. In contrast, the long-term debt was positively related to asset structure and profitability whereas it negatively related to bank risk, growth, size and corporate tax.
Another study in listed Banks on Ghana Stock Exchange was by Awunyo-Vitor & Badu (2012) from 2000 to 2010. This study was consistent with Amidu (2007) when there is a positive sign in the relationship between profitability and leverage. This study used three measurements (Return on Equity, Return on Asset and Tobin’s q) to measure the profitability and the findings shows negative relationship between profitability and leverage. Thus, the result was consistent with Amidu (2207) that there is a negative relationship between profitability and leverage. Study by Caglayan & Sak (2010) was on determinants of Turkish bank capital structure from perspective of the empirical capital structure literature, for non-financial firms. The author used panel data analysis to collect the data within the year of 1992 to 2007. This study examined the capital structure of banks in two different periods which were after the financial crises and restructuring periods in order to view the differences in determinants of capital structure in Turkish banks after the crisis and restructuring periods. Four determinants of capital structure have been used in this paper, which were the tangibility, size, profitability, and market to book.
The outcome for this study revealed that size and market to book have positive impacts on the leverage while the tangibility and profitability have negative impacts on the leverage. Baltaci, & Ayaydin, (2014) studied on determinants of capital structure in 39 Turkish banking for two years (2002-2012). The determinants were grouped into two which were the characteristics of the bank and country and macroeconomic factors. Profitability, tangibility and firm size were grouped under the bank characteristics while GDP growth rate, inflations rate, financial risk and average industry leverage were under country and macroeconomic determinants. They found that leverage positively associated with average industry leverage, firm size and GDP growth whereas relationship with tangibility, profitability, inflation and financial risk negatively associated. The paper of Mutairi & Naser (2015) examined the determinants of capital structure in 47 commercial banks, listed on the Gulf Cooperation Council (GCC) stock markets. The aim of the study was to investigate the relationship between the leverage level and the independent variables of capital structure of 47 commercial banks in GCC stock market over the period of 2001 to 2010. The following determinants of capital structure (independent variables) were developed from previous studies namely tangibility, risk, liquidity, size, profitability, bank’s age and growth.
The main findings showed negative relationship between leverage and profitability, tangibility and sizes. However, there were positive relationships between leverage, and growth and age. These results were in line with the pecking order theory except for the relationship with tangibility.
Ayanda, Christopher, Mudashiru, & Isaac (2013) examined the determinants of capital structure of Banks in Nigeria for the period of 2006 to 2010. The authors used the Pooled Ordinary Least Square (Pooled OLS) technique in order to test the relationship between banks capital structure and its determinants. There were seven (7) determinants, have been used in this study which were size of the bank, profitability, growth rate, dividend payout, business risk, tax charge and tangibility. The finding of this research revealed that dividend payout, size, tax charge and tangibility were positively significant with leverage ratio. However, growth, profitability and risk were negatively associated with leverage.