Measuring Performance Through Capital Structure: Evidence From The Banking Sector Of Vietnam
Abstract
The financial sector's agency costs are determined by the capital structure of economic organizations and banks. This study scrutinized the influence of the capital structure on the financial performance of Vietnam's banks. This study aims to examine the agency cost hypothesis of the Vietnamese banking sector by employing panel data from 28 banks spanning a period of 12 years, 2008 to 2020. Berger's (2002) concept of utilizing profit as a measure of the efficiency of banks was used in this study. The dependent variable for this examination is bank productivity, while the independent variables encompass leverage quota, size, banks' market power, bank investments, and loans. The regression analysis was conducted to determine the relationship between capital structure and profitability, considering capital structure as the independent
variable and profitability as the dependent variable. According to the study's findings, the capital structure has a substantial effect on the financial performance of the banks in Vietnam.