Ownership Concentration and Bank Profitability
Future Business Journal, Volume 3, Issue 2, Pages 159-171, Forthcoming
13 Pages Posted: 1 Aug 2017
Date Written: 2017
We investigate whether ownership concentration influences bank profitability in a developing country context. We focus on bank ownership concentration measured as the amount of direct equity held by a majority shareholder categorised into: high ownership concentration, moderate ownership concentration and disperse ownership. We find that banks with high ownership concentration have higher return on assets, higher net interest margin and higher recurring earning power while banks with dispersed ownership have lower return on assets but have higher return on equity. Also, higher cost efficiency improves the return on assets of widely-held banks and the return on equity of banks with moderate ownership. The findings have implications.
Keywords: Corporate Governance; Ownership Structure; Agency Theory; Profitability; Firm Performance; Banks; Return on Asset; Return on Equity
JEL Classification: G3; G34; G31
Suggested Citation: Suggested Citation