Determining of optimal risk level and optimal structure of capital based on logarithmic model of Border Operational Efficiency in Banks
Subject Areas : Financial engineering
mir hamid
sadat salmasi
1
(Department of Accounting, Babol Branch, Islamic Azad University, Babol, Iran.)
iman
dadashi
2
(Department of Accounting, Babol Branch, Islamic Azad University, Babol, Iran.)
hasmidreza
gholamnia roshan
3
(Department of Accounting, Babol Branch, Islamic Azad University, Babol, Iran.)
Keywords: Optimal capital structure, Banks, logarithmic model, Optimal risk level, cross-border operational efficiency,
Abstract :
The purpose of this study was to determine the optimal level of risk and optimal capital structure based on the logarithmic model of boundary operating efficiency in banks. In this study ، data envelopment analysis based on logarithmic boundary function modeling with assumption of geometric convexity is used to evaluate the efficiency of each Iranian bank for the performance years under study. Among the 28 factors identified through content analysis and knowledge domain analysis, sixteen factors included inputs, outputs, risk, Capital Structure (Minimum Capital, Minimum Capital Risk and Minimum Leverage Ratio), Bank Level Properties (Bank Size, Return on Assets, Return on Equity, Deferred Facility Rate and Liquidity Rate), Factors affecting efficiency, risk and capital structure of banks are identified. The research method relied on a theoretical-applied research design and a descriptive-deductive inference method. Twenty-five banks were selected from the Iranian banks by elimination method and studied over a six-year period ending on 29/12/97. Validation of estimation models based on coefficients of determination showed that regression equations have high explanatory power in determining the optimal level of risk and optimal capital structure based on different measures and Fisher's significant level of significance and generalizability of the estimated results are significant.
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