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Analysing the Impact of Capital Structure on the Performance of UK Financial Institutions - Dissertation Example

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Analysing the Impact of Capital Structure on the Performance of UK Financial Institutions

The Miller-Modigliani Theory 15 2.4.3. Pecking Order Theory 16 2.4.4. The Agency Cost Theory 18 2.5. Potential Determinants of Capital Structure 19 2.6. Statement of the Problem 26 Chapter 3: Data and Methods 28 3.1. Research Methodology 28 3.2. Research Purpose and Research Approach 29 3.3. Qualitative Research 29 3.4. Quantitative Research 30 3.5. Primary Research 30 3.6. Secondary Research 31 Chapter 4: Analysis and Results 34 4.1. Overview 34 4.2. Selection of Dependent Variables and Independent Variables 35 4.3. Data Analysis Techniques 36 4.4. Fieldwork and Data Collection 37 4.5. Hypotheses Formulation and Variable Selection 38 4.6. Data Sources and Data Presentation 44 Chapter 5: Discussion and Interpretation of Findings 50 5.1. Data Analysis and Discussion 50 5.2. Regression Results 51 Table 5.2.1 - The Regression Analysis of RBS 53 Table 5.2.2 - The Regression Analysis of Standard Chartered Plc 54 Table 5.2.3 - The Regression Analysis of Lloyds Group Plc 55 Table 5.2.4 - The Regression Analysis of Barclays Plc 56 5.3. Robustness of Statistical Data 58 5.4. Interpretation of Findings 60 Chapter 6: Discussion and Conclusion 63 6.1. Summary 63 6.2. Theoretical Implications 65 6.3. Practical Implications 65 6.4. Limitations 67 6.5. Directions for Future Research 67 6.6. Reflections 68 References 71 Bibliography 77 Appendices 80 Table 1 – Regression Model of Royal Bank of Scotland 80 Table 2 – Regression Model of Standard Chartered Plc 84 Table 3 – Regression Model of Barclays Plc 89 Table 4 – Regression Model of HSBC 93 Table 5 – Regression Model of Lloyds 97 Chapter 1: Introduction The functions of financial management of a firm deal with the management of the sources from which funds are received and the effective utilization of such funds. Debt holders and equity holders are the suppliers of finance, and they supply finance for raising capital for assets of the company. So they have the right to participate in cash flows generated from the investment of the raised capital. The ratio of share of profits generated is determined by the debt equity ratio. As debt holders are the first to be paid, they become important to the firm if the firm wants to maximize the returns of the equity holders. As cost is also an important component of financing, so on a way to examine the net benefit from an investment, the cost incurred on such investment is also to be accounted. The objective of the study is to analyse the impact of capital structure on the performance of financial institution of United Kingdom. In order to achieve the objective, the study covers literature review and theoretical framework of the topic. Research design has been done with the intention of selecting appropriate methodology and data collection analysis. Moreover, the data will also help to get the findings of the research. After interpreting the research findings, the study finally ends with conclusion, practical implication of the research and directions for future research. 1.1. Background of the Study The mix of financial liabilities of a firm is referred to as its leverage (i.e. a mix of financial instruments that tends to increase the potential of return of investment undertaking the risk associated with it). Although financial capital is uncertain, it is still considered to be the critical resource by all firms, and suppliers of finance make this investment so as to have control over the firm. In a firm debt holders and equity holders are the two types of investors who invest in equity and debt ...Show more


ANALYSING THE IMPACT OF CAPITAL STRUCTURE ON THE PERFORMANCE OF UK FINANCIAL INSTITUTIONS Table of Contents Chapter 1: Introduction 5 1.1. Background of the Study 5 1.2. Problem Formulation 9 1.3. Research Objectives 9 1.4. Significance of the Study 9 1.5…
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