The Impact of the Global Financial Crisis on the Value Relevance of Leverage in the Polish Banking Sector
The Impact of the Global Financial Crisis on the Value Relevance of Leverage in the Polish Banking Sector
Author(s): Piotr BolibokSubject(s): Economy, Business Economy / Management
Published by: Wydawnictwo Naukowe Uniwersytetu Szczecińskiego
Keywords: banks; market value; leverage; financial crisis; value relevance.
Summary/Abstract: Purpose – The paper is an empirical investigation of the impact of the global financial crisis on the value relevance of leverage in the Polish banking sector. Design/methodology/approach – The employed research methods include multiple linear regression analysis and the Chow test for a structural break in the model’s parameters. The examined sample covers all domestically- based commercial banks listed on the Warsaw Stock Exchange over the period 1998–2014. Findings – The results of the research indicate that the perception of financial leverage by equity investors in the Polish banking sector has changed significantly since the beginning of the global financial crisis. In the period preceding the crisis leverage appeared to have a positive, yet not significant, impact on banks’ market value. After the crisis started, however, this impact became significantly negative which might reflect a structural change in investors’ attitudes, resulting from considerably increased uncertainty and risk aversion in that period. Originality/value – The empirical evidence on the impact of the global financial crisis on the value relevance of leverage in the banking sector in the existing literature seems to be limited to the context of the U.S. market. In particular, it appears that no prior study has investigated this problem in the specific setting of the Polish capital market. The present study attempts, therefore, to enhance the existing international and domestic literature by filling this apparent gap.
Journal: Finanse, Rynki Finansowe, Ubezpieczenia
- Issue Year: 2016
- Issue No: 82 (2)
- Page Range: 679-688
- Page Count: 10
- Language: English