Citation:

Dr. Aniceth Kato Mpanju. "Capital Structure Influence on Firm’s Financial Performance: Differences in Commercial Public and Private Banks, Evidence from Tanzania" International Research Journal of Economics and Management Studies, Vol. 4, No. 5, pp. 8-17, 2025.

Abstract:

This study investigates the influence of capital structure on private and public firm’s financial performance measured by ROA and ROE in Tanzania. The period of 2000-2022 was chosen for the study as both databases have the capacity to store data for up to 22 years and beyond. The study survey was undertaken from 21 private commercial banks and 13 public commercial banks, which are listed at the Dar es Salaam Stock Exchange (DSE), which reached 426 and 286 years of observations, respectively. Total debt, long-term debt, and short-term debt are indicators of capital structure. The study then determines whether these correlations differ from one another. The link between the independent and dependent variables was examined using fixed effect regression. With the exception of the impact of short-term debt on Return On Assets (ROA) for publicly traded commercial banks and the impact of long-term debt on ROA for private financial institutions, the capital structure was shown to have a positive effect on performance. With the exception of long-term debt, there was no statistically significant difference in the impact of capital structure on profitability between private and public commercial banks.

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Keywords:

Capital Structure, Financial Performance, ROA, ROE, Commercial Banks.