Abstract
ABSTRACT Ownership concentration (OC) is important for improving bank stability, but its effect is arguable. Based on a sample of Chinese listed banks, we uncover a positive effect of OC on bank stability captured by Z-score, where the effect can be attributed to higher returns and capital levels of banks with more concentrated ownership. We also find that such banks have higher return volatilities and asset risks. These findings are more pronounced for smaller banks. An important policy implication is that bankers and regulators need to weigh the favourable and adverse effects of OC.
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