The effect of capital structure on financial performance

The study aimed to measure the effect of using loans and equity in the capital structure on evaluating financial performance, whether in terms of profits or liquidity, in banks in the city of Al-Kharj through the descriptive analytical approach. Data was collected from the study population through a questionnaire, where 200 questionnaires were distributed, of which 187 were collected, and 183 were valid for analysis. Data were analyzed using PLS-SEM software. The validity and reliability of the data were confirmed. The results of hypothesis testing showed a weak positive effect of using equity on the financial performance (profits and liquidity) of banks in Al-Kharj city. It also turned out that there was a strong positive effect of using loans on financial performance (profits) in banks in the city of Al-Kharj, and there was no effect of using loans on financial performance (liquidity). In banks in Al-Kharj city. The researcher recommended conducting more studies on the effect of capital structure on the financial performance of banks in other regions in the Kingdom of Saudi Arabia to confirm the validity of the current study results.