Family Business Groups and Organizational Structure: A Study of Bank Pyramidal Ownership in Thailand

50 Pages Posted: 13 Jul 2014

See all articles by Pramuan Bunkanwanicha

Pramuan Bunkanwanicha

ESCP Europe

Jyoti P. Gupta

European School of Management (ESCP-EAP)

Yupana Wiwattanakantang

National University of Singapore - Department of Finance

Date Written: July 11, 2014

Abstract

This paper investigates how banks and finance companies operate in a family business group. Using uniquely detailed ownership data from Thailand, we find that the controlling families extensively use pyramids to control banks and finance companies and assign different lending strategies across pyramidal tiers. Lower-tier banks tend to extend loans more aggressively and perform more poorly, while upper tier banks carry out more profitable investments. After the crisis hit, upper-tier banks survived and almost all lower-tier banks went bankrupt. Our results suggest that the multilayer organizational structure of bank ownership can affect a bank´s lending behavior and its resistance to economic shocks.

Keywords: Family business group, Pyramid, Ownership structure, Family-owned Bank, Thailand

JEL Classification: G21, G32

Suggested Citation

Bunkanwanicha, Pramuan and Gupta, Jyoti and Wiwattanakantang, Yupana, Family Business Groups and Organizational Structure: A Study of Bank Pyramidal Ownership in Thailand (July 11, 2014). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 434/2014. Available at SSRN: https://ssrn.com/abstract=2465165 or http://dx.doi.org/10.2139/ssrn.2465165

Pramuan Bunkanwanicha

ESCP Europe ( email )

79 Avenue de la Republique
Paris, 75011
France

Jyoti Gupta

European School of Management (ESCP-EAP) ( email )

79 avenue de Republique
Groupe ESCP-EAP
75543 Paris Cedex 11
France
+33 1 49 23 22 94 (Phone)
+33 1 49 23 20 80 (Fax)

Yupana Wiwattanakantang (Contact Author)

National University of Singapore - Department of Finance ( email )

Business School
Mochtar Riady Building #7-44, 15 Kent Ridge Dri
Singapore, 117592
Singapore
65-6516-1912 (Phone)

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