Investigating of capital structure of Bank based on risk and capital cost to improve function

The aim of this study was to investigate bank’s capital structure based on the risk and capital cost to improve the performance of bank using the bank's financial statements during the years 2006 to 2013. The hypothesis of this study implies that the bank’s capital structure is optimized. Moreover, the results of the study implies that there is no relationship between the capital structure and financing expenses (capital cost) of the bank. This hypothesis was examined and confirmed using the Pearson correlation coefficient. Then, the optimal capital structure for the years 2006 to 2013 were studied. The value of each of the variables for optimization of the capital structure of the bank was obtained using Principal Component Analysis (PCA). Then, using the software TOPSIS, we identified years in which the bank's capital structure was optimized. The results indicated that years 2006 and then 2013 enjoyed the most optimized capital structures between years 2006 and 2013. Finally, some implications for optimizing bank’s capital structure as well as future research were presented.