Analysis of the effect of financial failure factors on capital structure: Iraq example

The nature of the relationship between capital structure and financial bankruptcy is of great importance in terms of its effect on the performance and value of the enterprise. Companies seek to finance their investments and operations through a mix of debt and equity, and this combination creates a capital structure. This research is designed to test the effect of capital structure in reducing financial bankruptcies (profitability, bank size, liquidity and asset size) in financial institutions, especially private banks, in the Basra Governorate of Iraq. Random sampling method was used on the employees of private banks in Basra Governorate, face-to-face questionnaires were distributed by the researcher to the employees in the financial and administrative departments of these banks, and the questionnaires were collected from the participants a few days later. According to the results of the study, it has been determined that capital structure has an important role in reducing the risk of financial bankruptcy. He put forward the views that there should be a need for more borrowing than individual savings and that this would contribute to the economic development of the bank. However, achieving a higher return on capital may expose the bank to a lack of liquidity and the risk of being unable to meet its financial obligations.