The Impact of Capital Structure on the Profitability (An Empirical Study on the Banks Listed on Damascus Stock Exchange)

Abstract

The research aimed to study the impact of capital structure on profitability, with application to banks listed on the Damascus Securities Exchange. The research sample included 11 banks, with 143 observations during the period from 2011 to 2023. The research addressed bank profitability as a dependent variable, measured by return on equity, and capital structure as an independent variable, measured by debt-to-total-assets ratio and debt-to-total-equity ratio. Size was controlled as a limiting variable.

The results showed no statistically significant effect of the debt-to-total-assets ratio on return on equity before adjusting for the size variable, and continued to show no effect after adjusting for the size variable. While the results showed an inverse effect of the debt-to-total-equity ratio on return on equity before adjusting for size, there was no statistically significant effect of the debt-to-total-equity ratio on return on equity after adjusting for the size variable in banks listed on the Damascus Securities Exchange.