Inertia of the capital structure and its impact on credit capacity for commercial banks

An analytical study of a sample of commercial banks listed in the Iraqi Stock Exchange

for the period (2006 – 2020)

A Thesis Submitted by the student

Emad Neama Hashem Al-Mosuoy

To Council of the College of Administration and Economics/ Karbala University

It is part of the requirements for obtaining a master’s degree in banking and finance

Under the SupervisorA.P.D Zainab Makki Mahmood Al-Banaa

Abstract:

The study aimed to know the rigidity of the capital structure and its impact on the credit capacity. The study dealt with commercial banks listed in the Iraqi Stock Exchange. (10) banks were selected for the availability of information and data required in the study, namely (Bank of Baghdad, Commercial Bank of Iraq, Middle East Bank, Bank of the Middle East, Iraqi Investment, United Investment Bank, National Bank of Iraq, Commercial Credit Bank, Sumer Commercial Bank, Khaleej Commercial Bank, Mosul Bank for Development and Investment) for the period (2006-2020) based on the reports published in the Iraq Stock Exchange. The study used financial and statistical methods to achieve its objectives and to show the influence relationship between the study variables by using the panel data analysis method through the program EViews v.12.

The study reached a set of results, the most important of which is the inertia of the capital structure of commercial banks as a result of the failure to make the necessary adjustments at the level of financial leverage as a result of the instability of political and economic conditions and the failure to make adjustments to the capital structure by managers in order to preserve their position and influence. The study concluded with some recommendations, the most important of which is that it is necessary to make adjustments to the debt ratio to avoid the inertia of the capital structure, and this negatively affects the economic process, as well as the need to provide incentives for some managers to take decisions that help increase the wealth of the owners and not for personal interest.

Keywords: Inertia of the capital structure, credit capacity.

Inertia of the capital structure and its impact on credit capacity for commercial banks

An analytical study of a sample of commercial banks listed in the Iraqi Stock Exchange

for the period (2006 – 2020)

A Thesis Submitted by the student

Emad Neama Hashem Al-Mosuoy

To Council of the College of Administration and Economics/ Karbala University

It is part of the requirements for obtaining a master’s degree in banking and finance

Under the SupervisorA.P.D Zainab Makki Mahmood Al-Banaa

Abstract:

The study aimed to know the rigidity of the capital structure and its impact on the credit capacity. The study dealt with commercial banks listed in the Iraqi Stock Exchange. (10) banks were selected for the availability of information and data required in the study, namely (Bank of Baghdad, Commercial Bank of Iraq, Middle East Bank, Bank of the Middle East, Iraqi Investment, United Investment Bank, National Bank of Iraq, Commercial Credit Bank, Sumer Commercial Bank, Khaleej Commercial Bank, Mosul Bank for Development and Investment) for the period (2006-2020) based on the reports published in the Iraq Stock Exchange. The study used financial and statistical methods to achieve its objectives and to show the influence relationship between the study variables by using the panel data analysis method through the program EViews v.12.

The study reached a set of results, the most important of which is the inertia of the capital structure of commercial banks as a result of the failure to make the necessary adjustments at the level of financial leverage as a result of the instability of political and economic conditions and the failure to make adjustments to the capital structure by managers in order to preserve their position and influence. The study concluded with some recommendations, the most important of which is that it is necessary to make adjustments to the debt ratio to avoid the inertia of the capital structure, and this negatively affects the economic process, as well as the need to provide incentives for some managers to take decisions that help increase the wealth of the owners and not for personal interest.

Keywords: Inertia of the capital structure, credit capacity.