Impact of capital structure on Indian banking: an empirical analysis

Abstract

Multifarious studies have been conducted across the globe to ascertain the impact of capital structure on financial performance of various sectors and industries. Most of the studies are carried out on a thin sample size, but the present study is conducted to study the impact of capital structure on the financial performance of leading Indian public sector banks listed on the National Stock Exchange, having a relatively large set of data. The study scrutinises the impact of the capital structure on the profitability of public sector banks in India. The study used standard deviation, mean, and financial ratios along with regression analysis. The findings conclude that EPS has a negative correlation, whereas ROE has a positive correlation. The study has implications to investor community, academia and future researchers as it raises the question as to what extent there is a relationship between capital structure and profitability of the banks.