Capital structure and firm's profitability: study on the banking sector in Kenya
Date
2020
Authors
Ungwano, S.
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
This study dwells on the impact of capital structure on the firm's profitability based on the banks institutions operating in Kenya. The study will examine the listed banks in Kenya. There are numerous studies carried in Kenya on consequence of capital combinations on the firm profitability but most of them focused on the Micro finance businesses, industrial organizations and allied sectors. Banks operates differently from other financial sectors in general, hence banking sector should be properly distinguished from other firms that provide funds. Banks have unique regulations of operating and high leverage which makes them to be different from the rest of other firms in the market. Secondly, studies done pertaining significance of combination of capital of the banks listed in Kenya were very few. As we all know that Banks are among the key pillars financial providers and economy promoters, had to be studied. Due to the few research done to evaluate the effect of capital structure on banks profitability created the research gap. Furthermore, outcomes shall be of assistance to the banks managers when making decision on choosing the firms' capital structure, investors in making decision on their investments and Scholars who can use the findings to further this research. Debt, retained earnings as well as the equity were the independent variable used while Return on Asset and Return on Equity as dependent variables in this research. Descriptive design was utilized. This research utilized the secondary data where financial statements for the period 2005-2007 and 2010-2013 were sampled. The regression analysis results showed debt with equity had an adverse and significant relationship with banks profitability.
Description
Full - text undergraduate research project
Keywords
Citation
Ungwano, S. (2020). Capital structure and firm’s profitability: Study on the banking sector in Kenya [Strathmore University]. http://hdl.handle.net/11071/16054