Abstract:
Purpose: This study analyzes the bond between dependent variable (Leverage) and
Independent variables that are Growth, Tax rate, Regulation, Firm Size, and profitability,
and how it affects any firm in terms of its capital structure.
Methodology: This research is done to find the impact of determinants on capital
structure decisions. Only Islamic banks are selected, which are listed in KSE. Time
period which is selected for this study included data from 2008-2012. To analyze this
research, ANOVA, Regression, Coffiecient, and Collinearity Test are applied.
Findings: The results drawn from this research proves that Leverage is positively
correlated with profitability, tax. And if we look opposite scenario, in which regulation,
and firm size has a negative relationship with leverage. From regression results it shows
that there is 42.7% impact of independent variables on dependent variables.
Practical Implications: This study might help finance decision makers, economic and
finance students, to understand the importance of determinant variable in making optimal
capital structure of any firm. This study helps in order to give clear view of Islamic
banking capital structure.
