The Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India

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dc.contributor.advisorRajaratnam, Kanshukan
dc.contributor.advisorModack, Goolam
dc.contributor.authorGarach, Jatin Bijay
dc.date.accessioned2020-04-23T07:02:58Z
dc.date.available2020-04-23T07:02:58Z
dc.date.issued2019
dc.date.updated2020-04-23T01:17:38Z
dc.description.abstractThe banking industry in India has undergone many phases in its history; evolving from a regulated, decentralised system in the early 1800’s, to a regulated, centralised system during British rule, to a nationalised system following India’s independence, and finally a combination of a nationalised and private system adopting global standards as it currently stands. This study has two main aims. Firstly, it will assess the relationship between the firm-specific determinants of capital structure, based on the prevailing literature, and the capital structure of public and private sector banks in India. Secondly, it will determine whether there is a difference in the firm-specific factors that contribute to the determination of the capital structure of public sector banks and private sector banks. This study adopts quantitative methods, similar to previous studies on the relationship between capital structure and its firm-specific determinants. The dependent variable, being total leverage, is regressed against multiple independent variables, being profitability, growth, firm size and credit risk (hereinafter referred to as “risk” unless otherwise indicated) in a multivariate linear regression model. This study adds to the current literature by applying the same firm-specific independent variables to the case of private and public sector banks and then to evaluate and compare the similarities and differences between the regression outputs. The results show that for private sector banks, all independent variables are statistically significant in explaining total leverage, where all the independent variables conform to the current literature on capital structure – profitability (-), firm size (-), growth (+) and credit risk (-). Conversely, for public sector banks, all independent variables were considered to be statistically significant, except for credit risk – profitability (-), firm size (+) and growth (+). These results imply that credit risk is not an important determination in a nationalised banks’ capital structure; thus, providing evidence for the moral hazard theory of public sector banks.
dc.identifier.apacitationGarach, J. B. (2019). <i>The Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India</i>. (). ,Faculty of Commerce ,Department of Finance and Tax. Retrieved from en_ZA
dc.identifier.chicagocitationGarach, Jatin Bijay. <i>"The Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India."</i> ., ,Faculty of Commerce ,Department of Finance and Tax, 2019. en_ZA
dc.identifier.citationGarach, J.B. 2019. The Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India. . ,Faculty of Commerce ,Department of Finance and Tax. en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Garach, Jatin Bijay AB - The banking industry in India has undergone many phases in its history; evolving from a regulated, decentralised system in the early 1800’s, to a regulated, centralised system during British rule, to a nationalised system following India’s independence, and finally a combination of a nationalised and private system adopting global standards as it currently stands. This study has two main aims. Firstly, it will assess the relationship between the firm-specific determinants of capital structure, based on the prevailing literature, and the capital structure of public and private sector banks in India. Secondly, it will determine whether there is a difference in the firm-specific factors that contribute to the determination of the capital structure of public sector banks and private sector banks. This study adopts quantitative methods, similar to previous studies on the relationship between capital structure and its firm-specific determinants. The dependent variable, being total leverage, is regressed against multiple independent variables, being profitability, growth, firm size and credit risk (hereinafter referred to as “risk” unless otherwise indicated) in a multivariate linear regression model. This study adds to the current literature by applying the same firm-specific independent variables to the case of private and public sector banks and then to evaluate and compare the similarities and differences between the regression outputs. The results show that for private sector banks, all independent variables are statistically significant in explaining total leverage, where all the independent variables conform to the current literature on capital structure – profitability (-), firm size (-), growth (+) and credit risk (-). Conversely, for public sector banks, all independent variables were considered to be statistically significant, except for credit risk – profitability (-), firm size (+) and growth (+). These results imply that credit risk is not an important determination in a nationalised banks’ capital structure; thus, providing evidence for the moral hazard theory of public sector banks. DA - 2019 DB - OpenUCT DP - University of Cape Town KW - capital structure KW - financial firms KW - public sector banks KW - India KW - credit risk KW - capital regulations KW - panel data KW - multivariate regression modelling LK - https://open.uct.ac.za PY - 2019 T1 - The Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India TI - The Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India UR - ER - en_ZA
dc.identifier.urihttps://hdl.handle.net/11427/31673
dc.identifier.vancouvercitationGarach JB. The Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India. []. ,Faculty of Commerce ,Department of Finance and Tax, 2019 [cited yyyy month dd]. Available from: en_ZA
dc.language.rfc3066eng
dc.publisher.departmentDepartment of Finance and Tax
dc.publisher.facultyFaculty of Commerce
dc.subjectcapital structure
dc.subjectfinancial firms
dc.subjectpublic sector banks
dc.subjectIndia
dc.subjectcredit risk
dc.subjectcapital regulations
dc.subjectpanel data
dc.subjectmultivariate regression modelling
dc.titleThe Firm-Specific Determinants of Capital Structure in Public Sector and Private Sector Banks in India
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationnameMCom
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