Determinants of capital structure of banks in Ghana: an empirical approach

Abstract

Purpose

The purpose of this paper is to investigate the dynamics involved in the determination of capital structure of banks in Ghana.

Design/methodology/approach

The study employs panel regression model in examining the capital structure of banks in Ghana.

Findings

The results of this study show that profitability, corporate tax, growth, asset structure and bank size influence banks' financing or capital structure decision. The significant finding of this study is that, more than 87 per cent of the banks' assets are financed by debts and out of this, short‐term debts appear to constitute more than three quarters of the capital of the banks. This highlights the importance of short‐term debts over long‐term debts in Ghanaian banks' financing.

Originality/value

The main value of this paper is identification of factors that determine capital structure of banks in Ghana.

Citation

Amidu, M. (2007), "Determinants of capital structure of banks in Ghana: an empirical approach", Baltic Journal of Management, Vol. 2 No. 1, pp. 67-79. https://doi.org/10.1108/17465260710720255