Abstract
In this research, the direct impact of the three ownership structure (government, institutional and family) on bank risk takings measured by Z-Score is to be investigated. This is based on the Z-Score formulation that is used is based on the context that fits for Malaysia as one of the emerging markets. This research also investigates the impact of the ownership structure with capital adequacy ratio as the moderating element towards bank risk taking as measured by Z-Score, along with the five control variables. Data from eight large domestically-owned commercial banks in Malaysia for the period that runs from 2000 to 2012 are used in this research. Multiple regression and hierarchical moderated multiple regression results suggest that the three ownership structures employed in this study do not have any significant relationship on the risk measure in the direct relationship model. However, the results for the model where capital adequacy is included as a moderating factor show a significant relationship link between ownership structure and bank risk taking behaviour. The interaction between the family ownership and capital adequacy are also found to be significant towards risk taking. DOI: 10.5901/mjss.2015.v6n6s4p139
Highlights
From the corporate governance literature it shows that ownership is important and that it is helpful to view the issue in twofold; the context of the principal-agent framework and public choice theory (Altunbas et al, 2001)
As for the ownership structure, institutional ownership (INSTOWN) has the largest mean with value of 51.85 per cent, followed by government ownership (GOVOWN) (13.69 per cent) and family ownership (FAMOWN) (7.67 per cent)
For Equation 1, the result shows that none of the ownership structure; government ownership (GOVOWN), institutional ownership (INSTOWN) and family ownership (FAMOWN) has significant impact on the Z-Score of these eight large domestically-owned commercial banks
Summary
From the corporate governance literature it shows that ownership is important and that it is helpful to view the issue in twofold; the context of the principal-agent framework and public choice theory (Altunbas et al, 2001). Its prime emphasis is basically on non-financial firms, literature has provided considerable understanding of the effects of ownership.Agency problem between these two entities in the firm are resulted due to the separation of owners (financial provider) from decision maker (manager). The principal-agent problems in banks as per Levine (2004) may raise the issues attributable to what is the most appropriate governance structure for banks. The occurrence of the banking crisis is due to the banking fragility, whereby crises are less likely in economies with more concentrated banking systems (Beck et al, 2003). The stability of a bank is reflected by the degree of the risk taking of the bank
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
