Document Type : Research Paper
Author
Islamic Economics, Other, Imam Khomeini Educational & Research Institute, Qom, Iran
Abstract
The aim of this paper is to investigate the dynamics involved in determining the capital structure of banks in Islamic countries in order to provide guidance to financial managers for increasing capital. This study is conducted using a sample of 65 banks in Islamic countries covering banking systems in 19 countries for the years 1998 to 2022. The present study uses a two-stage least squares method and a panel regression model to examine the capital structure of banks in Islamic countries in order to determine the critical and functional factors of these banks, including controlling the performance of capital structure. The results of this study show that profitability, bank taxation, growth, asset structure, and bank size have an impact on financing or decision-making regarding the amount of capital structure of banks. In addition, the findings of this study indicate that more than 87 percent of bank assets are financed through debt, and of this, short-term debt constitutes more than three-quarters of the capital of the sample banks in Islamic countries. This shows the importance of short-term debt over long-term debt in financing Islamic banks. The main value of this paper is to identify the factors that determine the capital structure of banks in Islamic countries and increase the health and safety of the bank.
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