Bank Ownership Structure Research Articles

Do banking groups shape the network structure? Evidence from Turkish interbank market

Using a unique exposure data on Turkish banking system (disaggregated according to bank ownership structure and instrument level), we study the effects of ownership structure on the interbank network structure. During the sample period of 2003–2017, we observe that foreign and state deposit banks are the dominant institutions shaping the structure of the network under different contracts. Foreign banks, in particular, have a higher coreness vector in derivative exposures through their comparative advantage in offsetting derivative transactions. Moreover, our findings suggest that when foreign investors acquire domestic banks, the network structures of the acquired bank change considerably. We also present evidence that local and Basel III regulations play a significant role in the formation of the network structure through liquidity channel. We found highly liquid large banks and well-capitalized non-large banks have become more centralized in the interbank security market. The central bank's efforts to restore liquidity in the money markets during and after the global financial crisis seem to have increased the central role of foreign deposit banks in the overnight lending market against state and large private deposit banks.

The Effects of Regulatory Capital Requirements and Ownership Structure on Bank Lending in Emerging Asian Markets

This study examines the impact of regulatory capital requirements and ownership structure on bank lending in Emerging Asian Markets. The findings of the study imply that banks with excess capital are less affected by capital constraints and enjoy opportunities to extend their credit portfolios. The monitory policy indicator has the expected negative and significant impact on bank lending. In case of well-capitalized banks, the interaction between the excess capital and monetary policy indicator has a significant positive relation with bank lending, which means that banks with excess capital have capability to raise uninsured financing and shield their loan portfolios as compared to less-capitalized banks that reduce their lending in the period of monetary tightening. In the case of bank ownership structure, banks with excess capital ratios and ownership concentration lead towards an increase in lending activity. The findings also show that well-capitalized banks with managerial ownership tend to reduce lending which validates agency theory of corporate governance.

Inequality, concentration of wealth and ownership structure of Islamic banks

PurposeAn important Islamic imperative is prevention of concentration of wealth among a few so that wealth circulates widely to enhance shared prosperity. In contemporary economic discourse, inequality and concentration of wealth have emerged as among key causes of instability and crisis. Unfortunately, although Islamic finance has emerged as a Shari’ah-compliant industry, it does not seem to be connected with the Islamic concern about inequality and concentration of wealth. This paper aims to explore the issues of inequality and concentration of wealth in the context of Islamic finance.Design/methodology/approachThis paper addresses a number of queries: Are Islamic banks, as the dominant component of the industry, helping to improve inequality and concentration of wealth and thus offer a better framework to deal with instability and crisis? Is the ownership structure of Islamic banks conducive to meeting the Islamic imperative regarding inequality and concentration of wealth? Using secondary data, this research illuminates the pertinent issues in light of the experience of Bahrain as one of the hubs of Islamic banking and finance.FindingsThe paper finds that the ownership pattern of Islamic banks in Bahrain lends credence to the entrenched, not-so-unexpected concentration of wealth.Research limitations/implicationsThis study is based on data of one country. Further studies on other countries will help illuminate the relevant patterns and issues.Practical implicationsInequality and concentration of wealth are among central economic issues in contemporary economic discourse. Because of the significant impact of such inequality and concentration, societies need to be more aware of these impacts and devise ways to address it.Social implicationsInequality and concentration of wealth have fundamental social implications, as the issues of poverty, deprivation, exploitation, etc. are inseparable from concentration of wealth (accompanied by concentration of power), and widening wealth gap can cause or induce major socio-political upheaval.Originality/valueAlthough inequality and concentration of wealth are robust fields of inquiry, this might be the first work addressing the issue of concentration of wealth in the context of Islamic finance in general and Islamic banking in particular.

Developing a hybrid analytics approach to measure the efficiency of deposit banks

This study aims at analyzing the efficiency of deposit banks using contemporary analytics-based decision-making techniques within a fuzzy environment. Specifically, a hybrid analytic model drawing on a fuzzy analytical network process and data envelopment analysis was developed and applied to the assessment of Turkish deposit banks quoted on Borsa Istanbul. The findings revealed that; (i) the efficiency results for banking activity vary for competitiveness and for the adoption of new technologies before and after the financial recession; (ii) the majority of deposit banks operating primarily with non-interest based factors found to be less-efficient; (iii) the ownership and capital structure of banks do not significantly contribute to their banking performance, as they were technically inefficient during the same period; and (iv) the inputs of the banking activities could be reduced while a constant level of output is maintained by adopting and properly using the most efficient technology to boost the technical efficiency.

The Effect of Diversification of Loan Portfolio on Korean Bank Profitability : Evidence from Housing Loan

최근 주택 가격 하락, 정부의 가계대출규제 강화 등으로 주택담보대출에 집중된 국내 은행권의 대출포트폴리오가 다각화 방향으로 변화할 것으로 예상된다. 국내 은행권의 대출포트폴리오 다각화가 수익성에 미칠 전망을 판단하는 데 있어, 해외선행연구들에서는 상이한 결과들을 제시하고 있다. 본 연구는 국내의 은행 수익성을 전망하고, 학문적 쟁점을 검증하기 위해 대출포트폴리오 다각화와 수익성간 관련성을 실증 분석했다. 주요 분석결과로서, 첫째, 은행 대출포트폴리오 다각화 수준이 높을수록 총자산대비 이익률, 위험가중자산대비 이익률은 모두 높게 나타났다. 둘째, 대출포트폴리오의 다각화 수준에 따라 국내 은행 수익성에 미치는 영향력은 소유구조에 따라 차별적이지 않았다. 외국계 은행의 경우 자산운용의 다각화가 수익성을 낮춘다는 Nguyen (2018)의 주장은 확인되지 않았다. 셋째, 시장금리, 주택가격 변화율은 은행 수익성을 결정하는 주요 영향요인이었다. 즉, 낮은 시장금리, 높은 주택가격상승률이 은행 수익성 제고에 기여하였다. 결론적으로 향후 국내 은행들의 대출포트폴리오 다각화 경향은 수익성 제고에 기여한다고 판단된다. 하지만, 주택가격 하락, 시장금리 상승세는 은행 수익성을 제고하는 데 부정적으로 작용될 전망이다.It seems that the diversification of loan portfolio, concentrating on housing loan, is enhanced because of the drop in house price and the tight household loan regulation. However, different results are suggested by foreign studies in forecasting the effect of diversification of loan portfolio on Korean bank profitability. Thus, current study examined empirically the relationship between loan diversification and bank profitability to confirm the academic issue and to forecast the Korean banks’ profitability. Main findings are as follows. First, the higher loan diversification level is, the higher return on asset and return on risk weighted asset are. Second, the effect of loan diversification on bank profitability is not different according to bank ownership structure. The argument of Nguyen (2018), mentioning that profits of foreign banks tend to be decreased when loan diversification is enhanced, is not confirmed. Third, market interest rate and the change rate in house price are main influential factors in determining bank profitability. Low interest rate and high house price can help to enhance bank profits. Finally, it is estimated that loan diversification in Korean banks make their profitability enhanced but low house price and high interest rate negatively affect their profitability.

An Analysis on the Effect of Saving Banks on Financial Profitability and Stability after Restructuring : Focusing on Bank Size and Ownership Structure

An Analysis on the Effect of Saving Banks on Financial Profitability and Stability after Restructuring : Focusing on Bank Size and Ownership Structure

Ownership Structure and Financial Performance of Islamic Banks in Pakistan, Does Bank Ownership Structure Matter?

The basic purpose of this study is to investigate the determinants of ownership structure and their impact on performance of Islamic banking in Pakistan. Multiple techniques such as descriptive, regression and correlation analysis are used to check the ownership structure and financial performance of Islamic banking in Pakistan. We used secondary Data collected from published annual reports of Islamic banks and apply E-views software to check determinants of ownership structure and their impact on profitability of Islamic banking for this purpose C1, C3 and C5 variables use for ownership concentration, family, individual, institutional and government use for ownership mix as an independent variable and used bank characteristics and micro economic factor as a control variables and their impact on financial performance check through Return on assets (ROA) return on equity (ROE). The finding of this study shows that (C1) largest shareholder, government (GOV) and foreign shareholder negatively related to return on assets (ROA) whereas (C3) the percentage of first three largest shareholders and (C5) the percentage of first five shareholders insignificantly and negatively related to the return on equity while in ownership mix (INST) institutional shareholders and (FAM) family shareholders negatively influence the return on equity (ROE) on the other hand (GOV) state and (FORG) foreign shareholder positively influence the return on equity. In short results of this research conclude that ownership structure effect the financial performance of Islamic banks in Pakistan. This research helpful for financial advisor and investors for investment purpose. This study add value to the literature by exploring ownership structure and their impact on performance of Islamic banking and also provide information to investor about investment purpose and also increase the efficiency and effectiveness of Islamic banks. Keywords: Ownership structure, Financial performance, Islamic banking, Pakistan DOI : 10.7176/RJFA/10-5-04 Publication date :March 31 st 2019

The effects of prudential policies on bank leverage and insolvency risk in Central and Eastern Europe

This paper analyses the effects of prudential policies on leverage and insolvency risk in eleven Central and Eastern Europe banking systems in the 2005–2014 period. It explores the relationship between leverage, insolvency risk and regulation variables, and the temporal patterns of this relationship. It also examines whether the effects of prudential policies on leverage and insolvency risk are influenced by bank ownership structure and financial cycle. The paper finds a consistent link between prudential regulation and leverage, which varies over the sample period. Conversely, the insolvency risk shows a stronger relationship with macroprudential policies. The estimates reveal that prudential policies work better on leverage and z-score for foreign banks. Both leverage and insolvency risk are better mitigated over booms. Finally, prudential policies have similar effects on both domestic and foreign banks' stability in normal times, while the effects are opposite during turbulences. These dissimilarities are raising challenges to the conduct of prudential policies.

Stock Performance, Corporate Governance, and Efficiency of China and Taiwan Banks: Is there a Relationship?

This article examines whether the efficiency and ownership structure of banks is related to their stock performance in China and Taiwan. The DEA and DFA estimated the efficiency scores to be 0.3229 and 0.5048, respectively. The mean efficiency from the DFA method is more than the cost efficiency derived from the DEA. Is there a relationship? This article finds that banks have a greater efficiency then is directly reflected in enhanced expectations for the performance of the banks in the stock market, and the DFA efficiency estimates have a more valuable function reflected in the stock return when compared with the DEA efficiency estimates. This suggests that an X-efficiency score is a better indicatory index than the DEA model and traditional financial ratios for explaining stock returns.

Legal Regime of Information Owned by the National Bank of Ukraine

The article is devoted to the legal regime of information owned by the National Bank of Ukraine. The content of the concept of information is disclosed and its types are defined. The legal basis for disclosure of information owned by the National Bank of Ukraine is investigated and the aspects of protection are analyzed. Information is any information and/or data that may be stored on a physical medium or displayed electronically. The legislation defines the following types: information about an individual; information of reference and encyclopedic nature; environmental information; product information (job, service); scientific and technical information; tax information; legal information; statistical information; sociological information; other types of information. Information owned by the NBU includes information about an individual, namely information or a set of information about an individual that is identified or can be specifically identified; information about the debtor of the bank (and/or related persons); on credit operations of banks and on the status of the fulfillment of obligations under such operations, analysis and classification of loans; information on monetary and banking statistics; information on the ownership structure of banks and the composition of banking groups, bank executives. The legal bases for disclosure of this information are defined in the Laws of Ukraine “On the National Bank of Ukraine”, “On Banks and Banking”, “On Access to Public Information”, Regulations on the Credit Registry of the National Bank of Ukraine, etc. The regulation on the organization of information security measures in the banking system of Ukraine defines the following principles of information protection: the approach to information security should be systematic (comprehensive); the process of improvement and development of information security must be continuous and carried out by substantiation and implementation of rational means, methods, measures using the best international experience; safeguards against real and potential threats to the information security of the bank should be timely and adequate; ensuring the proper level of information security of the bank is impossible without the support and control of the bank’s executives; sustainable development of information security systems is only possible if resources, including financial resources, are sufficient. The features of information protection in banking systems are set by the National Bank. Keywords: the legal regime of information, information, open data, information with restricted access, information security, National Bank of Ukraine, credit register.

Ownership structure and risk profile of banks in emerging economies

This article analyzes the relationship between ownership structure and risk profile based on the data from the emerging banking market. Using Kohonen self-organizing maps, we divide banks into clusters according to the type of risk profile. This mapping technique is based on panel data dimensionality reduction, as risk profile is changeable over time. We adopted the Basel Committee on Banking Supervision recommendations regarding the types of concentration of funding serving also as a basis for determining the risk exposure of banks and used them as an input for Kohonen maps. We conclude that business models and, consequently, risk exposures of banks significantly depend on sources of capital (domestic private, foreign, state). Our empirical results show that ownership type is a major, but not the only factor influencing bank risk profiles. These findings call for a change of the regulatory paradigm in emerging (banking) markets.

Inequality, Concentration of Wealth and the Ownership Structure of Islamic Banks

An important Islamic imperative is prevention of concentration of wealth among a few so that wealth circulates widely to enhance shared prosperity. In contemporary economic discourse inequality and concentration of wealth have emerged as among key causes of instability and crisis. Unfortunately, while Islamic finance has emerged as a Shari’ah-compliant industry, it does not seem to be connected with the Islamic concern about inequality and concentration of wealth. Are Islamic banks, as the dominant component of the industry, helping to improve inequality and concentration of wealth and thus offer a better framework to deal with instability and crisis? Is the ownership structure of Islamic banks conducive to meeting the Islamic imperative regarding inequality and concentration of wealth? The research in this paper illuminates the pertinent issues in light of the experience of Bahrain as one of the hubs of Islamic banking and finance.

The Relative Efficiency of Commercial Banks in Pakistan with Respect to Size and Ownership Structure During and After Global Financial Crisis

Purpose: This study has been carried out to find out the relative efficiency of the commercial banks in Pakistan over a five- year period from 2006 to year 2010 using Frontier Approach of efficiency. The commercial banks included in this research paper are public sector banks, privatized banks, domestic private banks, and foreign banks. In addition to overall efficiency comparison of the commercial banks, this study has also tested the effect of size and ownership structure of the commercial banks in Pakistan on their efficiency. 
 Data/Design/Methodology/Approach: Out of 44 banks, 21 commercial banks have been chosen, which, in terms of deposits, account for about 94 percent of total deposits of the banking sector (Rs.5,124,308 million) as on December, 2010. Secondary data of the banking firms have been gathered from their audited financial statements. Intermediation approach has been used by employing Data Envelopment Analysis. The relative efficiency of the commercial banks has been investigated in context of intermediation approach which transforms labor and capital into advances/loans and investments.
 Findings: Over all a very few commercial banks have achieved 100% efficiency. It is, however found that privatized and domestic private banks have shown better efficiency in terms of financial intermediation as compared to public sector and foreign banks. The size of the banks has a very slight effect on the relative efficiency of the banks. The global financial crisis has affected the efficiency of some of the commercial banks but for a small period of time.
 Originality: This paper is an attempt to find out the relative efficiency of the commercial banks during the mentioned period which lies during the Global Financial Crisis. Its findings would be of great value for every stratum of society including bankers, business community, academicians, and government and of course, the investors.

Corporate governance in banks: Systematic literature review and meta-analysis

This paper provides a two steps investigation of the literature on banking corporate governance. We firstly perform a systematic literature review on the academics papers focused on risk management, compensation and ownership structure of banks. Then we run a meta-analysis investigation over more than 2,500 observations to clarify the understanding of the relationship with performance and risk in banks. The sub-group analysis related with bank performance shows a clear and significant finding: Board ownership, CEO ownership and Controlling shareholder enhance the performance of banks. Conversely, State ownership is negatively associated with bank performance. Results of the whole investigation and directions for scholars are also discussed.

How ownership structure affects bank deposits and loan efficiencies: an empirical analysis of Chinese commercial banks

This study explored how dramatic changes in ownership structure and operational technologies have influenced Chinese bank efficiency over the past decade. The study included an empirical analysis using 5 years (2011–2015) of operational data for 71 Chinese commercial banks. Two two-stage meta-frontier data envelopment analysis network models and multiple regression models were used to estimate and analyze impacts of variations in bank ownership structure. The main empirical results show that irrespective of deposits or loans efficiency, State-owned Banks (SOBs) have the highest technology and management levels. In contrast, City Commercial Banks should improve both technology and management levels, narrowing the gap with SOBs and Joint-stock Banks. The deposit efficiency of a bank was found to be mainly influenced by the nature of ownership (national shareholding ratio and the shareholding ratio of the domestic legal entities) and ownership concentration. The loan efficiency of a bank was mainly affected by the nature of ownership (the shareholding ratio of the foreign legal entities) and ownership liquidity.

Cyclicality of lending in Africa: The influence of bank ownership

Ownership structure of banks has dramatically changed over the past two decades in African countries with privatization and foreign bank entry, including the expansion of Pan-African banks. The objective of this paper is to investigate how bank ownership influences cyclicality of lending in Africa. We are then able to assess how changes in bank ownership influence the economy. To this end, we measure the sensitivity of bank loan growth to GDP per capita growth of the host country with dynamic GMM estimations. We use panel data from 190 commercial banks covering 20 African countries spanning the period from 2002 to 2015. We find that lending of African banks is procyclical for all types of banks. However, we observe that Pan-African banks are the least procyclical banks, while no significant difference in procyclicality is observed between state-owned banks, domestic private banks, and other foreign banks. In addition, we find evidence that foreign banks are influenced by GDP per capita growth of their home country. Therefore, our findings support the view that the expansion of Pan-African banks contributes to reduce cyclicality of lending. However, foreign bank entry can enhance the transmission of external shocks.

Slavkina M. A. Modern trends in the development of the banking sector of Ukraine in the context of the strategic objectives of ensuring its economic security.

The purpose of the article is to identify general trends in the development of the banking sector and to highlight the factors that reduce its level of economic security. Special conditions for the functioning of the banking sector make the analysis of current trends in its development extremely relevant. Research methods were general scientific and special, in particular: generalization, observation, graphic, economic and statistical, comparison, analysis, abstraction. The article describes the general trends in the development of the banking sector of Ukraine. It was stated that there is a decrease in the number of banks in the market, the unprofitability of their activities is growing, the transformation of the tools and methods of the entire banking system has taken place, lending to businesses and individuals has tended to decrease, the gap between individual deposit rates for the year and 6 months has decreased There were significant changes in the ownership structure of banks in Ukraine. It is proved that the functioning of the banking sector occurs in the conditions of socio-economic and political destabilization, the NBU's tough policy. The factors that infuse the state of the economic security of Ukrainian banks are summarized and evaluated. The influence of external and internal factors on the development of the domestic banking sector has been studied. The improvement of the banking market was carried out by eliminating entities that do not stand up to competition and do not comply with standards. It was emphasized that mergers and acquisitions that will continue to occur in order to achieve the minimum authorized capital defined by the NBU will inevitably lead to monopolization of the market. It is proved that the level of capitalization is insufficient, a significant part in the structure of the banking sector of foreign banks, poor quality of assets and public distrust of banks remain unresolved and threaten the economic security of the banking system of Ukraine.

Bank ownership, lending relationships and capital structure: Evidence from Spain

This paper analyses the influence of bank ownership and lending on capital structure for a sample of listed and unlisted Spanish firms in the period 2005–2012. The results suggest that bank ownership allows banks to obtain better information and reduce the agency costs of debt, as it has a positive relationship with the maturity of debt and a negative relationship with the cost of debt. These results are consistent with the predominance of the monitoring effect in bank ownership over the expropriation effect. The role of banks as shareholders and lenders also contributes to reduce agency cost of debt, as it reduces debt cost.

Bank ownership structure, regulations and risk-taking: evidence from commercial banks in Pakistan

This paper conducts the first empirical assessment of the theories concerning the influence of ownership structure on bank risk-taking in the presence of regulations in Pakistan. The sample used in this paper comprises a panel data of 26 banks in Pakistan, for the period from 2000 to 2014. The analysis provides evidence that increase in ownership concentration leads to an increase in bank risk-taking. Managerial ownership is associated with high risk-taking at low and high levels of managerial ownership while at intermediate level, managerial ownership has negative impact on bank risk-taking. Different types of ownership of banks in Pakistan have different impact on risk-taking. While government, family and institutional ownership have a positive impact on bank risk-taking, foreign ownership has a negative impact on bank risk-taking. Furthermore, the results show that capital regulations are important in influencing bank risk-taking with regard to higher ownership concentration. The findings of this paper suggest that the relation between bank risk-taking and capital regulations typically depends on the type of ownership.

Pragmatics and problemmatics of the banking sector functioning in Ukraine

Introduction. The permanent occurrence of crisis phenomena in the Ukrainian economy requires the state authorities and the National Bank to search for effective and optimal ways to overcome the economic downturn. Among the important elements in building a system of measures to counteract the recession and stimulate stable economic growth is to ensure a high level of financial stability of the banking system of the country. The banking system has key functions in the mechanism of implementation of the state economic policy to counteract the emergence of negative trends in both the real and financial sectors of the economy. In connection with this, the urgency of the issue of ensuring the proper level of functioning of the banking system is violated.
 Aim and tasks. The purpose of the research is to deepen the theoretical positions regarding the problematic aspects of the activities of banking institutions and to develop practical recommendations for improving the efficiency of their functioning in Ukraine.
 Research results. The paper examines the current state of functioning of the banking sector. On the basis of the conducted research, the existence of direct and indirect influence on functioning of the banking system in Ukraine was noted. The existence of the relationship between the main macroeconomic factors and functioning of the banking sector has been proved. By means of mathematical tools, a direct correlation between the growth of gross domestic product and the growth of net bank assets was established. The positive foreign experience of countries with transition economies, which managed to ensure the efficient functioning of the banking system has been considered. The promising measures that will promote the improvement of the banking system and stimulate economic development have been outlined.
 Conclusions. The analysis of the status of banking institutions indicates the need for changes and effective reforms in the banking system. Realization of any type of reforms carries both potential advantages and the possibility of occurrence of certain risk situations. Therefore, it is expedient and consistently to outline a list of measures that will promote the improvement of the banking system and stimulate economic development, namely: a systematic approach to solving the problem of asset quality; increase of the savings base, which will allow to expand lending; strengthening of the requirements for disclosure of information about the financial status, ownership and management structure of banks; increasing financial literacy of the population; provision of corporate governance of banks on the basis of the best world standards; carrying out constant supervision of the degree of concentration of bank capital in terms of the country and its origin.