The determinants of Portuguese banks' capital structure

• Autor(a) principal: Serra, Alexandre Jorge da Mata Reis Ribeiro
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/22149
• topic: Banks; Capital ratio; Capital determinants; Financial crisis; Bancos; Rácio de capital; Determinantes de capital; Crise financeira

This dissertation examines the capital determinants of Portuguese banks, based on the existing theory for the determinants of non-financial firms, aiming to confirm the effectiveness of this theory in Portugal. This study uses Panel Data of 21 banks from 1990 to 2018 (386 observations). To check this theory, a fixed effects model and a fixed effects model with AR (1) disturbance were estimated with Debt-to-Assets ratio as the dependent variable. The independent variables used were Profitability, Size, Collateral, Tangible Assets, Deposits, GDP growth rate, Interest Rate and Inflation Rate. In the estimation by fixed effects, the only variable that has no significance is Collateral, with the estimation by fixed effects with AR (1) disturbance generating results without significance for Collateral, Deposits and the macroeconomic variables. These results indicate that the non-financial firms’ capital theory is also evident in Portuguese banks, proving that regulation is not the only factor that determines their level of capital. In addition, a fixed effects model was estimated with a dummy variable that assumes the value of 1 between 2008-2013 and a dynamic model with the lagged dependent variable, which indicates that the debt ratio is persistent, and banks increased their capital ratios during the crisis to protect themselves against the economic uncertainty.