COVID-19 Impact on the Capital Structure of Commercial Banks: Evidence from the Western Balkans
COVID-19 Impact on the Capital Structure of Commercial Banks: Evidence from the Western Balkans

Summary/Abstract: This study aims to measure the influence of COVID-19 on the capital structure of Western Balkans commercial banks, before and during COVID-19 using annual data for the period 2015 - 2020. Using pooled ordinary least squares regressions, the relationship between bank book leverage as the dependent variable and bank-specific explanatory variables such as profitability, Tier 1 capital, bank size, collateral, earnings volatility, and liquidity is investigated. COVID-19 as an independent variable is also presented in this paper. GDP and inflation are control (constant) variables that influence the outcome. By regressing the panel data, we conclude that the comparison of factors affecting the capital structure of the respective commercial banks, in the form of profitability, leverage ratio, size, collateral, earnings volatility and liquidity, before and during the COVID-19 pandemic, tend to have significantly different values.

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