Ownership Concentration and Bank Profitability

Future Business Journal, Volume 3, Issue 2, Pages 159-171, Forthcoming

13 Pages Posted: 1 Aug 2017

See all articles by Peterson K Ozili

Peterson K Ozili

University of Essex - Essex Business School; Central Bank of Nigeria

Olayinka Uadiale

University of Essex

Date Written: 2017

Abstract

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

Ozili, Peterson Kitakogelu and Uadiale, Olayinka, Ownership Concentration and Bank Profitability (2017). Future Business Journal, Volume 3, Issue 2, Pages 159-171, Forthcoming . Available at SSRN: https://ssrn.com/abstract=3010769

Peterson Kitakogelu Ozili (Contact Author)

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Central Bank of Nigeria ( email )

Plot 33, Abubakar Tafawa Balewa Way
Central Business District, Cadastral Zone
Abuja
Nigeria

Olayinka Uadiale

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
38
Abstract Views
497
PlumX Metrics