Factors affecting financial leverage of Vietnam commercial banks and recommendations

Abstract

Financial leverage involves selecting a proportion of debt and equity ratio, which are the main sources of financing in
any enterprise. Therefore, we also see the study of financial leverage as the study of capital structure. In other words,
we consider how many percent of the capital is financed by debt, how many percent of the capital is financed by equity,
and why do firms have that choice? The task of financial management is carefully assess factors affecting the capital
structure of firms from which offer an optimal capital structure to increase company value. As a kind of enterprise,
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commercial bank is not an exception. This paper will review several international studies on this issue and assess
factors affecting capital structure of Vietnamese commercial banks. On this basis, the authors study factors affecting
the financial leverage of the 22 banks selected in 2009-2014 period and use research findings to suggest a number of
recommendations concerning this issue