Firm-specific Determinants of Capital Structure of Kenyan Commercial Banks

Abstract

Commercial banks play significant role of contributing to the country’s economic growth by mobilizing investments funds. Due to lack of agreement about optimal determinant of capital structure, the study will seek to establish firm specific determinants of capital structure on commercial banks in Kenya. The study selected 42 commercial banks as the population. The independent variables; the determinants of capital structure were growth rate, profitability, liquidity, age and size. Secondary data from 2015 to 2019 was obtained annually. A descriptive cross-sectional design together with multiple regression model was utilized in the analysis. The independent variables did not indicate any collinearity. There was a moderate correlation among the variables with growth rate and size being positively correlated with capital structure while profitability, liquidity and age were negatively correlating with capital structure. The study recommends that more research to be undertaken increasing the study period and the variables under study.