Capital Structure, Ownership and Crisis: How Different Are Banks?

Employing data for 1992-2012, the article examines the factors affecting the capital structure of publicly listed Indian banks from a corporate finance perspective and compares the findings by exploiting a comparable sample of largest (based on their average market capitalization of last three years) non-financial firms. The analysis indicates that profitability, growth opportunities and risk are the factors that are most relevant in influencing bank capital. Second, the crisis appears to have exerted a perceptible impact on bank capital. On balance, the results do not support the conventional wisdom that banks’ capital structure is purely a response to the regulatory requirements.