Factors Affecting Capital Structure Decisions of Banks: A Systematic Literature Review Evidence from Commercial Banks of Ethiopia

Abstract

Abstract The study intends to examine the literature on factors influencing capital structure decisions of commercial banks in Ethiopia in order to identify existing gaps and the degree of existing research in the subject, as well as to provide direction for future research. Due to a lack of studies for the stated review and access to the known database, the review was conducted utilizing eleven relevant and available scholarly papers that were published in any time period, primarily using open search engines and databases. To identify the articles, various key words were employed. The PRISMA framework was used to analyze the capital structure decisions study work. The review protocol outlined the inclusion and exclusion criteria. The descriptive analysis was performed based on different parameters to arrive at conclusions. The findings revealed that most of the variables of interest explored in the studies contradicted each other and the previous literature variables. The capital structure studies were conducted by considering few variables, and most of the studies were not cited. The findings regarding the theories supported by factors affecting the capital structure decisions of commercial banks in Ethiopia were contradictory and not justified. The banking literature still doesn't cover the capital structure of banks very much. There is currently a lack of clarity regarding how banks determine their capital structure and what variables affect their corporate financing behaviour. Therefore, it is recommended that the concerned body conduct an in-depth study of the decisions banks make about their capital structure by identifying pertinent elements.