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Research Article Open access CC BY 4.0

The Impact of the Debt Ratio, Total Assets, and Earning Growth Rate on WACC: Evidence from Nepalese Commercial Banks

Prem Bahadur Budhathoki, Chandra Kumar Rai

Asian Journal of Economics, Business and Accounting · pp. 16–23 · Published 11 May 2020

10.9734/ajeba/2020/v15i230210

Abstract

This study examined the impact of the debt ratio, total assets, and earnings growth rate on banks’ WACC. This study employed bank scope data of twenty-eight commercial banks during the single period of 2018. Altogether, there were 28 observations were made in the study. The ordinary least squares model was used to analyze the data. The results indicated that two predictor variables debt ratio and total assets significantly affected the bank’s WACC. But the predictor variable earnings growth rate did not significantly affect banks’ WACC. The results of this study could help bankers and policymakers to take effective action to reduce banks’ WACC.

debt ratio total assets earnings growth rate.

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