The Moderating Effect of Operating Leverage on the Relationship between Financial Leverage and Financial Performance (An Applied Study on the Traditional Private Banks Listed on the Damascus Stock Exchange)

Abstract

Abstract

This research aimed to test the effect of financial leverage on the financial performance of private traditional banks in Syria during the period 2010-2020, in addition to testing the modified effect of operating leverage on the relationship between financial leverage and financial performance. Financial performance was measured using (return on total assets), while financial leverage and operating leverage were measured using (total debt to total assets), and (total fixed assets to total assets), respectively.

To achieve the objective of the research, two models were relied on based on quartile data of Panel Data, and the parameters of the models were estimated using the Pooled regression model, after conducting differentiation tests (F test, Hausman test, Lagrange multiplier test). The results showed that there is no effect of financial leverage on financial performance as measured by (rate of return on assets). The results also showed the absence of a modified effect of operating leverage on the relationship between financial leverage and financial performance