Capital Structure Impact on Classical and Islamic Banks Profitability: Evidence from Moroccan Context


Mohamed Lachaari(1*), Mustapha Benmahane(2)

(1) LARGESS, FSJES Chouaib Doukkali University, El Jadida, Morocco
(2) LARGESS, FSJES Chouaib Doukkali University, El Jadida, Morocco
(*) Corresponding Author

Abstract


The focus of this paper is to clarify how capital structure affects Moroccan banks profitability and to answer the question about the impact of the participative banks introducing into the Moroccan banking system on bank’s profitability. Thus, the sample concerns, on one hand, data from 2007 until 2018 about the most important Moroccan banks regarding their market share and the collected data is analyzed using OLS regression. Therefore, in this work we introduce the participative banks data into the model to see how it behaves. Our findings show an increasing relationship between banks profitability and debt ratio with acceptable indicators. Therefore, leverage would be preferable to equity under study’s specific conditions, which means that bank’s profitability is generally related to bank’s capital structure. Although, when participative banks data are included we observe capital structure has no important effect on banks profitability in spite of the fact that the model is still significant.

Keywords


Profitability, Capital structure, Participative banks, Return on equity, Equity ratio

Full Text:

PDF

References


Baker, M., & Wurgler, J. (2015). Do strict capital requirements raise the cost of capital? Bank regulation, capital structure, and the low-risk anomaly. American Economic Review, 105(5), 315–320.

Bavoso, V. (2022). Financial Intermediation in the Age of FinTech: P2P Lending and the Reinvention of Banking. Oxford Journal of Legal Studies, 42(1), 48–75.

Boussaada, R., & Hakimi, A. (2020). How multiple large shareholders affect bank profitability under the dispersion and the coalition hypotheses? An insight from the MENA region. International Journal of Managerial Finance.

Caselli, S., Corbetta, G., Cucinelli, D., & Rossolini, M. (2021). A survival analysis of public guaranteed loans: Does financial intermediary matter? Journal of Financial Stability, 54, 100880.

Chang, X., Chen, Y., & Dasgupta, S. (2019). Macroeconomic conditions, financial constraints, and firms’ financing decisions. Journal of Banking & Finance, 101, 242–255.

Derbali, A. (2021). Determinants of the performance of Moroccan banks. Journal of Business and Socio-Economic Development.

El Ouafy, S., & Ed-Dafali, S. (2014). Financement des coopératives agricoles marocaines, structure et performance. EuropeanScientific Journal, 367–382.

Hachimi, A., Salahddine, A., & Housni, H. (2017). SME financing in Morocco: issues and alternatives. Journal of Innovation & Business Best Practice.

Hanieh, A. (2015). Shifting priorities or business as usual? Continuity and change in the post-2011 IMF and World Bank engagement with Tunisia, Morocco and Egypt. British Journal of Middle Eastern Studies, 42(1), 119–134.

Ho, T. S. Y., & Saunders, A. (1981). The determinants of bank interest margins: theory and empirical evidence. Journal of Financial and Quantitative Analysis, 16(4), 581–600.

Hoque, H., & Pour, E. K. (2018). Bank‐level and country‐level determinants of bank capital structure and funding sources. International Journal of Finance & Economics, 23(4), 504–532.

Hunjra, A. I., Ijaz, M., Chani, D., Irfan, M., & Mustafa, U. (2014). Impact of dividend policy, earning per share, return on equity, profit after tax on stock prices. Hunjra, AI, Ijaz, M. S, Chani, MI, Hassan, S. and Mustafa, U.(2014). Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices. International Journal of Economics and Empirical Research, 2(3), 109–115.

Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261–297.

Myers, S. C. (1984). The Capital Structure Puzzle. The Journal of Finance, 39(3), 574–592.

Orazalin, N., & Mahmood, M. (2018). The financial crisis as a wake-up call: corporate governance and bank performance in an emerging economy. Corporate Governance: The International Journal of Business in Society.

Salman, A., & Nawaz, H. (2018). Islamic financial system and conventional banking: A comparison. Arab Economic and Business Journal, 13(2), 155–167.

Yapa Abeywardhana, D. (2017). Capital structure theory: An overview. Accounting and Finance Research, 6(1).




DOI: https://doi.org/10.15575/ijik.v12i2.17709

Refbacks

  • There are currently no refbacks.


Copyright (c) 2022 Mohamed Lachaari and Mustapha Benmahane

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

 


IJIK: International Journal of Islamic Khazanah has been indexed on:

Google ScholarDOAJ

 

 UIN Sunan Gunung Djati Bandung
Abdul Haris Nasution Street No.105, Cibiru,  Bandung, Jawa Barat, Indonesia

E-mail: IJIK@uinsgd.ac.id

Lisensi Creative Commons

IJIK are licensed under Attribution-ShareAlike 4.0 International

 
Flag Counter
View my Stats ( Click )