Capital Structure Determinants for Local Commercial Banks Thailand Evidence

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Benjalux Sakunasingha
Preecha Anekwasinchai
Varang Wiriyawit


This study explores significant determinants of bank capital structure, and how they help to explain these structures. A fixed-effects regression model was applied to analyze Thai local banks during the period from 2004-2014. Two measurements of bank leverage were used, namely book value leverage ratio and risk-weighted book value leverage ratio. Firm-level determinants were bank profitability, risk, growth, and liquid assets with GDP growth rate, inflation rate, unemployment rate, and public debt as country-level determinants. Empirical results indicated that both firm-level and country-level determinants had statistically significant relationships with the book value leverage ratio, except for the unemployment rate. However, when we examined the influence of these determinants on the risk-weighted book value leverage ratio, only growth, liquid assets, unemployment rate, and public debt showed a statistically significant relationship. These empirical findings may assist bank managers in implementing relevant policies to ensure soundness and stability in the Thai banking sector.


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