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JIMS8M: The Journal of Indian Management & Strategy
Year : 2016, Volume : 21, Issue : 3
First page : ( 54) Last page : ( 59)
Print ISSN : 0973-9335. Online ISSN : 0973-9343.
Article DOI : 10.5958/0973-9343.2016.00025.9

Impact of Capital Structure on Financial Performance of Banks

Pinto Prakash1, Quadras Jennifer Maria2

1Professor and Dean, Department of Business Administration, St. Joseph Engineering College, Vamanjoor, Mangaluru, Karnataka

2Faculty, PG, Department of Commerce, St. Aloysius College (Autonomous), Mangaluru, Karnataka

Online published on 10 October, 2016.

Abstract

This study attempts to analyze the impact of capital structure on financial performance, of banks i.e. how the proportion of debt and equity will have an impact on financial performance. The proportion of debt and equity is determined by the corporate managers. The financial performance of a firm is directly affected by the capital structure decision. Maximization of shareholders’ wealth is one of the main objectives of firm's management. To achieve this objective proper care and attention must be given while taking rational financial decisions regarding optimal capital structure which in turn reduces the cost of capital. Corporate managers should choose the combination which will maximize profitability and the firm's market value.

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Keywords

Capital structure, financial performance, Debt to equity, Debt to total assets.

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