The effect of capital adequacy ratios, capital structure and liquidity on financial performance of commercial banks

The broad economic position of banks and credit institutions in the economy of the country highlights the fact that in order to ensure the stability and performance of the banking system of the country, there should always be a good ratio between capital and risk in the assets of banks. Deciding on the structure of capital has been one of the most difficult and challenging issues facing companies, but at the same time the most vital decision is to continue to survive. The purpose of this study is the effect of capital adequacy and capital structure on financial performance of commercial banks. In this study, the financial information of 15 banks accepted in Tehran Stock Exchange during the period of 1389 to 1395 was analyzed using Panel Data regression method. The results indicate a positive and significant impact of the ratio of capital adequacy and capital structure on financial performance. The size of the bank has a negative and significant effect on the return on equity of the bank. Bank age and percentage of institutional shareholders do not have a significant effect on the return on equity of banks.