Abstract
It has always been believed that government ownership would lead to bad financial performance and overstaffing in any organization. This study aims to examine the effect of government ownership on staffing level and the financial performance of Kuwaiti bank over the period 2010-2018. Using the financial data of ten banks listed at Kuwait stock exchange (KSE), results shows that there was s statistically significant direct relation between government ownership and overstaffing and statistically significant inverse relation between government ownership and the financial performance of banks measured by return on assets (ROA). On the other hand results show that there was no relation between overstaffing and the financial performance of Kuwaiti banks.
Highlights
Government sectors has always been lagging behind the private sectors in terms of efficiency, productivity, and financial performance
This study aims to investigate the effects of government ownership on both the level of staffing and financial performance in Kuwaiti banks
Where lnStt is the natural logarithm of the estimated number of staff required by the bank, ROA is the return on assets, TA is the total assets of the bank, Lev is the bank leverage, and Br is the number of branches the bank has
Summary
Government sectors has always been lagging behind the private sectors in terms of efficiency, productivity, and financial performance. The ownership of government in banks, either complete or partial, would likely result in transferring some of the government management system culture into the way the bank operates This imported government management culture would have an impact on the efficiency, productivity, and the financial performance of the bank. The second one is the political theorists which suggests that government own banks to fund inefficient but politically desirable projects. None of these theories supports the ultimate goal of any business organization which is profitability and enhancing shareholders wealth. The reason for that is that government representatives in the bank board of directors do not own shares in the bank and their membership in the board was through appointing them by the government. Needless to say that at the end of the day those government representatives get their salaries from the government and not from the bank
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