Determinants of Capital Structure of Banking Sector in GCC: An Empirical Investigation

Abstract

This work attempts to identify determinants of capital structure in a sample of commercial banks listed on the Gulf Cooperation Council (GCC) stock markets. To achieve this objective, data about were collected from 47 GCC commercial banks for the period between 2001 and 2010. We find that profitability and liquidity affect banks’ capital structure decision. The major contribution of this study is that, the majority of the commercial banks’ assets in GCC is financed by debts which represents more than 80 percent of the capital of the banks. This emphasizes the importance of long-term debts in commercial banks’ financing in GCC.