Impact of debt on profitability performance: A case study on Libyan banks

Impact of Debt on Profitability Performance: A Case Study on Libyan Banks does have any effect on the cost of capital of commercial banks in Libya. The study was conducted on 4 commercial banks in Libya which were in operation in Libya for the nine years of study from 2008 to 2016, by using balanced panel data. The various ratios of these commercial banks were computed from the various data collected from the data extracted from their financial statement for the period. The data was then analyzed using a linear regression model to establish if there is any significant relationship between the financial risk and cost of capital of these commercial banks. The finding of the analysis concluded that there is a strong negative relationship between the debt ratio and return on assets, while there is a positive relationship between the return on equity and the debt ratio. However, it is also concluded that there is no relationship between and the debt ratio and the net profit margin.