Factors Affecting Capital Structure Decision The Case Of Private Commercial Banks In Ethiopia

This research paper presents the factors affecting capital structurerndecisions of private commercial banks in Ethiopia. The study wasrnconducted mainly on sets of data that were collected from the six privaternbanks infive consecutive years (2003 - 2007) and by conducting interviewrnwith the financial managers of the six pri:1ate commercial banks; AlB,rnBOA, DB, NIB, UB and WB, which could pro:;ide the pertinent andrnnecessary data existing at least during the last five yeo.rs.rnThe collected data were analyzed using the pooled tir,'e-series correlation.rnThe mean values of the dependent variable (cauital structure) arerncorrelated with the mean values of the independent variables. The studyrnhas also inculcated in the analysis the primary data obtained byrnconducting interview with the financial officers and banking supervisors.rnThe results from the analysis has emphasized on two findings: the firstrnhas identified the major factors affecting the control steractur decision ofrnthe selected private commercial banks. '"he second finding has justified thernrelationship (positive or negative) between the factors affecting capitalrnstructure decision such as financial risk, profitabilit ) . tax-shield, assetrncomposition, and dilution of control, with debt -to- equity ratio i. e. thernmeasure of capital structure. Based on, analysis , conclusions andrnrecommendations were forwarded

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