Does capital structure affect the valuation of banks?

Abstract

In this paper, we examine the capital structure and other factors affecting the valuation of U.S. banks. The study focuses on the largest publicly traded U.S banks in 2000-2019. To achieve the purpose, a quantitative method has been applied where a dataset has been analyzed through balanced panel data. We find that banks relationship between debt and equity differs from that of non-financial companies and our regression model shows that the capital structure has an impact on the valuation of banks in the stock market.