The dynamics of capital structure measurement indicators within the framework of market timing theory and their impact on improving banking performance efficiency

This research aims to study the impact of capital structure dynamics indicators, within the framework of market timing theory, on banking performance efficiency, specifically return on equity and return on assets. The study sample included six Iraqi commercial banks listed on the Iraq Stock Exchange, and data were collected over a twenty-year period from 2005 to 2024. The study relied on market timing indicators as independent variables (bank size, liquidity ratio, tangible assets ratio, and market-to-book ratio), and used panel data models and random forest algorithms for statistical analysis. The results showed a strong positive impact of the market-to-book ratio on banking performance, supporting the principles of market timing theory. Conversely, tangible assets demonstrated a significant negative impact that hinders profitability. The study recommends that bank management leverage the high market valuations of their shares to enhance their financial flexibility and operational efficiency.