The way the banks carry out their operations is determined by the size of the bank and by the banking regulation. In order to perform these operations, banks need to decide whether the operations are going to be financed with equity, debt or a with a mix of both. The mix of equity and debt financing is known as capital structure, and the previous literature on banks’ capital structures suggests that the size of the bank may affect the relation between leverage and the factors of leverage: profitability, size, growth, risk, collateral, and the bank’s dividend payments. This study examines whether the relation between leverage and the factors of leverage is depended on the size of the bank. In addition to this, the banking regulation has changed since the last studied on banks’ capital structures have been conducted, which means that the relation between the new regulatory requirements and capital structure needs to be investigated. The primary purpose of this study is to examine whether leverage and the factors of leverage are dependent on the size of the listed banks headquartered in one of the member countries of European Union between the years 2009 and 2017. In order to study this, data of the banks is gathered from the Eikon database. Another purpose of this study is to investigate the nature of the relationship between the capital structure in banks and the regulatory requirements.   The theories on capital structure such as the, MM propositions, trade-off theory, and pecking-order theory are used to explain the variables of this study and the relation between the capital structure and regulatory capital. Previous literature of the banks’ capital structures and of the relation between size and the banks’ operations were studied in order to come up with the research questions. This study takes a deductive research approach and utilizes the quantitative research strategy. The data is analyzed by conducting regressions analysis for panel data in order to determine the relations studied.   Conclusions about whether the bank size determines the relation between leverage and its factors, and of the nature of the relation between capital structure and regulatory capital will be drawn. This study finds that the bank size determines the relation between leverage and the factors of leverage. Further, the relation between capital structure and regulatory capital is found to be strong. Under the new regulation, the capital structure theories do not apply at all for the small banks. These theories do not apply either when the banks, small or large, are close to meeting their regulatory capital requirements.  For larger banks meeting their capital requirements, the larger the banks get, the more of their leverage can be explained by the classic capital structure theories.

The diploma thesis focuses on the evaluation the financial situation of TWIN CAR, Ltd. in the years 2007 - 2010 using selected ratios of financial analysis. On the finding and evaluate the results according to various indicators of financial analysis will be drawn with concrete proposals and recommendations to improve the financial situation and the stability of the company in future years.

The debt-to-equity ratio is useful for showing a company ́s financial capacity. As a result of the accompanying risks that a high level of leverage entails, most companies strive to be financed by equity as much as possible. However, tax benefits obtained through debt financing add complexity to the issue as a trade-off between risk and reward should be carefully considered. Previous empirical literature has shown that there is a relationship between the composition of the board, the gender of the CEO and the company’s capital structure.  The purpose of this study is to describe and analyze the relationship between the composition of the board and the CEO’s gender as well as the company’s capital structure in Swedish listed companies of Large, Mid and Small Cap between the years 2016 – 2020. This is done through a quantitative method where secondary data is analyzed through a multiple regression analysis. The result shows that there is no statistically significant relationship between the composition of the board and the company’s debt-to-equity ratio, while there is a negative statistically significant relationship between the CEO’s gender and the company’s debt-to-equity ratio. This leads to one of the study’s two hypotheses being rejected while the other hypothesis is accepted.

The global financial market has been under a lot of stress in the past years. With the financial crisis that started in 2008, in the US and spread around the world, it created awareness that the world’s financial market requires more regulation to withstand such a crisis. Therefore a new recommended framework for the global financial market was developed by the Basel Committee on Banking Supervision; Basel III. Basel III presented a new era with stricter supervision of banks and tighter regulations. As the European Union is one of the world’s most integrated regions, it strives to be the first to implement the Basel III framework. In order to achieve this, the European Union created its own legislative package, the Capital Requirement Directive IV.The research purpose of this dissertation is to examine how divergences in Sweden, Denmark and Germany’s national financial markets will affect their ability to implement the new CRD IV regulations. Based on the research the conclusion is that our Swedish respondent is most prepared in meeting the new regulations of our three respondents; the characteristics of the Swedish financial market seem well fit to meet the new requirements. Both Germany and Denmark seems to be experiencing problems; the characteristics of their financial markets create obstacles when implementing the new regulations. Denmark has difficulties with their mortgage lending market due to their unique mortgage model. Germany will have problems with the leverage ratio and their inflexible three pillar banking system. Germany’s government has been skeptical to the new CRD IV regulations and this might also have affected our German respondent in a negative way. With the implementation of the regulations the European Commission aims to improve the banking sector in the member states, so that they will be able to endure stress periods better and help to prevent another financial crisis. However, the implementation of the new regulations puts a lot of pressure on the banks and how well they can perform during the implementation process. With this research a questionnaire is created that will help understand how three major banks in Sweden, Denmark and Germany will be affected by the new regulations and if the characteristics of their national financial markets will give them advantages or disadvantages when implementing them. The answers also give us a conclusion to which of the new regulations each respondent will have the most difficulty of implementing. Future research is suggested to be done into the Danish mortgage lending market and their unique mortgage model, to see if it can co-exist with the new CRD IV regulations. Also an in-depth research into the German three pillar banking system can be interesting, to find out if they are able to maintain it or if they have to restructure it.

This dissertation explored the efficacy of the new Basel III banking standards in SACU, grounded on the conjecture that they are not reflective of economies of SACU, but are merely an intensification of Basel II, rather than a substantial break with it. Firstly, loans and assets were tested for causality, since Basel III believes growth in these variables led to securitization. The leverage ratio has been introduced in Basel III as an anti-cyclical buffer. The OLS technique was employed to test for its significance in determining growth in bank assets. SACU feels the impact of debt, with credit is marginally treated in Basel III and is not introspective of the realities of its economies. ANOVA tests using debt, credit and GDP were done to determine a better method of addressing cyclicality. The leverage ratio was insignificant in Namibia, with debt and credit having momentous impacts on GDP in SACU. / Economics / M. Com. (Economics)

Inledning: Modigliani och Miller-teoremet betraktas som en milstolpe och ett paradigmskifte inom Corporate Finance. Forskningen bakom teoremet har gett upphov till den kontroversiella slutsatsen att ett företags kapitalstruktur är irrelevant på en jämviktsmarknad, utan beskattning. När beskattning däremot förekommer, ökar företagsvärdet motsvarande den avdragsgilla skatten på räntekostnader vid belåning. Teoremet har dock inte varit utan kritik. Flera forskare har undersökt teoremet och kritiserat teoremets antaganden. Syfte: Syftet med studien är att undersöka Modigliani och Miller-teoremet i avseende av kapitalstrukturens inverkan på företags aktiekurser. Tidigare forskning: Modigliani och Miller-teoremet med dess antaganden presenteras inledningsvis som studiens grundläggande teori. Därefter presenteras agentteorin, signaleringsteorin, trade-off-teori och effektiva marknadshypotesen tillsammans med tidigare forskningsstudier om teoremet och antagandena. Metod: Studien tillämpar en kvantitativ metod, med tre regressionsmodeller. Det slumpmässiga urvalet består av tio företag inom industribranschen som är registrerade på Stockholmsbörsen. Urvalet består av paneldata från företagen under perioden 2005 till 2012. Studiens empiri består av historiska aktiekurser och årsredovisningar. Resultat: Skuldsättningsgraden visar en låg och icke signifikant korrelation med aktiekurserna för de undersökta företagen, i samtliga tre regressionsmodeller. Skatteskölden visar en högre och signifikant korrelation med aktiekursen, medan kontrollvariabeln vinst per aktie EPS visar den högsta korrelationen med aktiekursen, som responsvariabel. Slutsats: Studiens resultat visar inget empiriskt stöd för Modigliani och Miller-teoremet i dess helhet. Förklaringen till resultaten kan vara att antagandena inte tillfredsställs inom empirin. Agentteori, signaleringsteori, trade-off-teori och effektiva marknadshypotesen kan stå som förklaringar till studiens resultat. / Introduction: Modigliani and Miller theorem is regarded as a milestone and a paradigm shift in Corporate Finance. The research behind the theorem has given rise to the controversial conclusion that a company's capital structure is irrelevant in an equilibrium market, without taxation. In contrast, when taxation occurs firm value will increase equivalent to the deductible tax on interest expense when debt is issued. The theorem has not been without criticism. Several researchers have examined the theorem and criticised its assumptions. Purpose: The purpose of the study is to investigate the Modigliani and Miller theorem in respect of capital structure’s impact on companies' share prices. Literature Review: The Modigliani and Miller theorem with its assumptions is initially presented as the study’s main theorem. The presentation of the theorem is followed by a description of agency theory, signalling theory, trade-off theory and the efficient market hypothesis, along with previous studies on the theorem and its assumptions. Research Methodology: The study applies a quantitative approach, with three regression models. The random sample consists of ten companies in the industrial sector, that are listed on the Stockholm Stock Exchange. The sample is based on panel data of the companies during the period 2005 to 2012. The study's empirical data consists of historical stock prices and annual reports. Empirical Results: The leverage ratio, i.e. debt to equity ratio, indicates a low and non-signif-icant correlation with the stock prices of the examined companies, in all three regression models. The tax shield indicates a higher and significant correlation with the stock price, while the control variable earnings per share EPS indicates the highest correlation with the stock prices, as the response variable. Conclusions: The study’s results show no empirical support for the Modigliani-Miller theorem in its entirety. The explanation for the findings may be that the assumptions are not satisfied in the empirical data. Agency theory, signalling theory, trade-off theory and the efficient market hypothesis may serve as explanations of the study’s results.

Project finance has become a vital financing vehicle for undertaking capital-intensive and infrastructure investments. In 2017 alone, the value of deals signed using project finance was estimated at approximately $229 billion. Despite its increasing importance, little is known regarding the impact of project-level, and country characteristics on the loan terms. This thesis proceeds in examining these determinants along three empirical essays. The first essay (Chapter 3) focuses on how domestic lead arrangers certification (in emerging markets) impact the pricing of project finance loans. Using a sample 1270 project finance loan tranches signed between 1998 and 2011, and worth over $300 billion, the chapter posits that domestic lead arrangers certification reduce search and information cost, which in turn, reduces the financing cost. The results, after controlling for endogeneity of certification decision, indicate a reduction of 47 basis points in the spread offered on PF loans. The magnitude of this reduction differs across industries, geographic region, and income classification of the project countries. The second essay (Chapter 4) examines the relationship between PF contractual structures and loan outcomes, using a sample of 5872 project finance loan tranches signed between 1998 and 2013, and worth approximately $1.2 trillion. The chapter hypothesises that (i) non financial contracts (NFCs) (that is, contracts used to manage the various project functions), reduces overall project risk, (ii) the involvement of project sponsors as key counterparties to the non-financial contracts is an additional signal of project s potential worth, and (iii) the effects observed in (i and ii) are stronger, if sponsor counterparties have verifiable credit ratings. After matching loan tranches with NFCs to those without, the results indicate that the use of NFCs reduce both the loan spreads and leverage ratios. This impact is higher if the sponsor counterparties are credit-rated. The results are also stronger for developing countries. The third essay examines the impact of country-level institutions on project finance loan spread and leverage ratio, using a sample of 3,362 loan tranches signed between the year 1998 - 2012. The chapter investigates whether political and legal institutions are substitutes (or complements), that is, if improvement in one absorbs the weakness of the other, and vice versa. Further, the essay examines if project finance network of contracts substitutes for these institutions. The results indicate that political and legal institutions are substitutes. Specifically, improvements in political institutions lead to a reduction in both the loan spread and leverage ratio for countries with weak legal and governance institutions. The chapter also finds that where NFCs are included in PF, the impact of political institutions on loan spread reduces. On the other hand, the impact of political institutions on leverage ratio is higher when NFCs are used. The findings from the three research chapters provide interesting insights on how lenders and sponsors create value through contract design.

Purpose: The thesis purpose is to, with regards to relevant theories, explain how the variables industry affiliation, growth, uniqueness and tangiability affect modern, swedish firms capital structure. Method: A quantitative method along with a deductive approach has been used to make this study. Multiple regression analysis has been applied in order to identify statistical relationships between various variables. Conclusion: The empirical results can only to a certain degree confirm what the theories are claiming. The statistical relationship the growth, profitability, uniqueness in a firm has with leverage is negative. Moreover, tangibility turned out to have a positive relationship to leverage, which coincides with said theories. / Syfte: Uppsatsens syfte är att utifrån relevanta teorier förklara hur variablerna lönsamhet, branschtillhörighet, tillväxt, unikhet och tillgångsstruktur påverkar svenska bolags kapitalstruktur. Metod: En kvantitativ metod med deduktiv ansats har använts för att möjliggöra denna studie. Multipel regressionsanalys har tillämpats för att statistiskt kunna identifiera samband mellan olika variabler. Slutsats: Resultatet stämmer nästan genomgående med teoriernas antaganden. Sambandet mellan tillväxt, lönsamhet, unikhet mot skuldsättningen är negativt. Det visade sig dessutom att det finns ett positivt samband mellan tillgångsstruktur och skuldsättningsgrad, vilket stämmer med vad teorierna hävdar.

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This dissertation explored the efficacy of the new Basel III banking standards in SACU, grounded on the conjecture that they are not reflective of economies of SACU, but are merely an intensification of Basel II, rather than a substantial break with it. Firstly, loans and assets were tested for causality, since Basel III believes growth in these variables led to securitization. The leverage ratio has been introduced in Basel III as an anti-cyclical buffer. The OLS technique was employed to test for its significance in determining growth in bank assets. SACU feels the impact of debt, with credit is marginally treated in Basel III and is not introspective of the realities of its economies. ANOVA tests using debt, credit and GDP were done to determine a better method of addressing cyclicality. The leverage ratio was insignificant in Namibia, with debt and credit having momentous impacts on GDP in SACU. / Economics / M. Com. (Economics)