Bank Ownership Type Research Articles

Financial market discipline on bank risk: Implications of state ownership

This study investigates the link between capital market discipline and bank-level credit risk with a special emphasis on the role of bank ownership structure. Focusing on a large emerging market, Türkiye, characterized by a prominent state bank presence, our baseline regression results indicate that banks' stock price volatility elevates in response to the increases in non-performing loan ratio for the period 2008–2021. More importantly, the extent of capital market discipline on credit risk is amplified for state-owned banks. This finding remains similar against a myriad of robustness checks. To analyze the implications on alternative financial markets, we further extract high-frequency implied volatility measures from options contracts recently traded on individual bank stocks. By utilizing the Covid-19 outbreak as an exogenous shock to local banks’ loan portfolio quality, we perform difference-in-differences estimations for the interval of October 2019–June 2020. Our findings show that the implied volatility for non-private banks increases more in the post-shock phase compared to other bank ownership types.

The impacts of innovation and trade openness on bank market power: The proposal of a minimum distance cost function approach and a causal structure analysis

This study estimates output market power in the Chinese banking industry using the multi-output Lerner index. We propose a minimum distance cost function approach, which allows us to determine not only the level of market power but also the non-profit maximizers and efficiency level of Chinese banks. Following the first-stage analysis, we employ the generalized method of moment system estimator to evaluate the impacts of bank innovation and trade openness on market power in a multi-output banking context. In particular, we innovatively propose a causal structure analysis based on Wang and Blei (2019) to validate and verify the robustness of our results. We also assess this relationship for different types of bank ownership in China. The findings suggest that Chinese banks exhibit high market power in loans. Furthermore, the results show that bank innovation and trade openness have a significant negative impact on market power in loans, but a significant positive impact on market power in securities. The results also indicate a significantly negative impact of trade openness on overall market power. We find that higher levels of innovation among state-owned and joint-stock commercial banks improve the overall level of market power. The results suggest that, for all bank ownership types, trade openness has a significant negative impact on market power in loans but a significant positive impact on market power in securities. The impact on the overall level of market power is consistently significant and negative.

Factors Influencing Adoption of IoT and Its Impact on CRM in Banks: Examining the Moderating Role of Gender, Age, and Bank Ownership Type

Internet is becoming a part of our lifestyle; however, the usage rate and application of the Internet are disparate in different parts of the world. In many emerging countries, the Internet is yet to penetrate ordinary households. The present study focuses on how IoT adoption impacts the banks’ customer relationship management (CRM) in an emerging market context. Furthermore, the moderating roles of gender, age, and bank ownership type on the relationship between the adoption of IoT and CRM have also been tested. Cost, convenience, social context, and privacy were studied as the predicting variables of IoT adoption, while IoT adoption was investigated as the antecedent of CRM. The CRM variable has been operationalized as a second-order latent construct consisting of three first-order latent variables: responsiveness, satisfaction, and assurance. A cross-sectional, non-probability-based survey was conducted from 467 bank customers of three public and three private sector banks in Aligarh city of India. Two CFA models were run to ensure reliability, validity, and model fit. Hypotheses were tested using structural equation modeling (SEM) on AMOS software, while PROCESS Macro v4.0 by Hayes (2009) was used to test the moderating effect of gender on the relationship between IoT adoption and CRM. The results indicate that cost, convenience, social context, and privacy are positively influencing IoT adoption, which in turn positively affects CRM. Gender and age were found to have a negative moderation effect on the path between IoT adoption and CRM, while bank ownership type positively moderated this link.

Mobile Banking and Bank Performance: Do Bank Ownership Types Matter?

In Indonesia, mobile banking users and transactions continue to increase. Regulators and banks anticipate that digitalization will improve banking performance and financial stability. In contrast to technology-based financial services or FinTech, the digitization of banking services in Indonesia is considered somewhat tardy. FinTech, which offers digital services, is a threat to banks. Covering 138 commercial banks in Indonesia from 2004 to 2018, this study investigates the influence of mobile banking on bank performance in Indonesia. Additionally, this study investigates whether bank ownership influences the performance-enhancing effects of mobile banking based on bank ownership. A dynamic panel data analysis approach with a two-step GMM system is used to test the hypothesis. This study finds that mobile banking significantly improves bank profitability and stability in Indonesian banking. These results are more significant for private banks. Moreover, digitalization is crucial in the banking sector, particularly with the adoption of mobile banking because it encourages banks, particularly private banks, to perform better than those that do not use mobile banking. This is the first study investigating the impact of mobile banking on banks' performance and financial stability based on bank ownership in Indonesia. Keywords: mobile banking, bank ownership, bank profitability, bank stability. DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.60.7

CO-MOVEMENT BETWEEN BANK LOAN GROWTH AND ECONOMIC GROWTH IN INDONESIA USING WAVELET COHERENCE ANALYSIS

This study investigates the co-movement between bank loan growth and economic growth in Indonesia from 2010 to 2020 using the Wavelet Coherence Analysis. The co-movements are divided into three different categories, i.e., bank ownership type, credit types, and bank size classification based on the Indonesian Financial Services Authority (OJK), referred to as the BUKU. This study shows that economic growth precedes bank loan growth in Indonesia between 2010-2020. Meanwhile, state-owned banks show the highest correlation between economic growth and loan growth among different types of bank ownership. In contrast, foreign-owned banks' loan growth shows a low correlation to economic growth. We also find that working capital loan growth has the highest correlation to economic growth than other loan types. Finally, this study reveals that medium-size banks (classified in BUKU 3) loan growth has the highest correlation to Indonesia's economic growth. Additionally, banks' loan growth in small banks (classified in BUKU 1 & 2) and large banks (classified in BUKU 4) shows fewer correlations. By discovering different co-movements between economic growth and loan growth of different bank ownership types, bank size groups, and loan types, regulators are expected to make valid policies to improve Indonesia's economic growth.

Private credit in dual banking countries: Does bank ownership type matter?

AbstractThis study investigates how the effects of government and foreign bank ownership on private credit vary in the cases of Islamic and conventional banks using data extended from Claessens and van Horen (2014) of 29 dual banking countries from 1995 to 2017. In support of the political view of financial development, we find that the presence of state‐owned Islamic banks seem to be slightly less harmful to private credit flows than their conventional peers, particularly in the period after the global financial crisis. We also document evidence showing that countries with a larger foreign Islamic bank presence tend to have deeper credit markets postcrisis. However, such advantages may often be outweighed by the costs associated with increased penetration by foreign conventional banks.

The Riskiness of Banks: An Empirical Analysis of the Depositor’s Sensitivity

This study focuses on checking for the existence and strength of the market discipline based on different ownership structures of the banks. First, this article determines if depositors react rationally to risk levels depending on the bank's ownership type, and second, if the strength of this responsiveness differs depending on the bank's ownership type. This study is based on 38 banks in the Indian banking sector. Empirical testing is carried out using panel data analysis and various proxies to assess the riskiness of the banks. The analysis shows that market discipline exists regardless of the kind of ownership. However, its strength varies across different ownership structures of the banks. These findings are crucial for the orderly functioning of the banking system so that the bank managers do not take advantage of the market perception based on their state ownership.

Does ownership structure affect firm performance? Evidence of Indian bank efficiency before and after the Global Financial Crisis

AbstractThis paper investigates the relationship between bank ownership and efficiency before and after the 2008–2009 Global Financial Crisis. Using a sample of 58 Indian commercial banks from 2005 to 2017, we examine the interconnection between these factors in a dynamic data envelopment analysis (DEA) framework. We use an innovative modeling strategy based on a two‐stage dynamic DEA framework. The first stage employs the Dynamic Slack‐Based Measure model to measure bank efficiency, explicitly considering the effects of desirable and undesirable carry‐overs between consecutive periods. In a second stage, we perform a regression of the efficiency scores on bank ownership types and several other contextual factors, while also accounting for the presence of endogenous relationships between the variables involved. Our results show that foreign banks outperform their domestic competitors, with bank size and profitability being the main drivers. We also find that while foreign and state‐owned banks were more efficient than their rivals during the Global Financial Crisis, private banks recovered quickly, reaching the efficiency standards of state‐owned banks by 2017. The latter faced a prolonged decrease in efficiency, gradually losing their initial advantage over their private domestic counterparts. Our results are robust to alternative regression specifications, especially those aimed at addressing potential endogeneity issues. The applied methodology and the findings of our research should be of interest to scholars, bank managers, and policymakers. The latter, in particular, should be concerned about the medium‐term effects of reforms that unevenly affect banks with different ownership structures, especially in terms of bank resilience to aggregate shocks.

دور المناخ الأخلاقی فی تحقیق استدامة الموارد البشریة دراسة تطبیقیة على البنوک التجاریة المصریة

يهدف البحث الى التعرف على دور المناخ الأخلاقي في تحقيق استدامة الموارد البشرية بالبنوک التجارية المصرية، وتم استخدام قائمة الاستقصاء کأداة رئيسية لجمع البيانات، وتم استخدام قائمة موجهه للعاملين وبلغ حجم مجتمع البحث 73007 مفردة، وبلغت عينة البحث 383 مفردة ورغبة منا في زيادة نسبة تمثيل العينة لمجتمع البحث فقد قام بزيادتها لتصبح 405 مفردة، ولقد تم استخدام برنامج التحليل الإحصائي (SPSS) لإدخال ومعالجة وتحليل البيانات واختبار الفرضيات. وتوصل هذا البحث إلى مجموعة نتائج أهمها: وجود تأثير إيجابي ذو دلالة إحصائية لبعد المناخ الأخلاقي على استدامة الموارد البشرية، ووجود اختلافات ذات دلالة إحصائية بين أراء المستقصي منهم حول ابعاد استدامة الموارد البشرية حسب نوع ملکية البنک. وقدم البحث مجموعة من التوصيات أهمها: العمل على تحسين المناخ الأخلاقي بالقطاع المصرفي المصري لما لذلک من ارتباط معنوي إيجابي في تحقيق استدامة الموارد البشرية، الاهتمام ببناء مدونات اخلاقية بحيث تکون بمثابة المرشد والموجه لقرارات المديرين وسلوک العاملين في البنک نحو الاعتبارات الأخلاقية، ربط الأجور والمکافأت بمدى التزام العاملين بالسلوکيات الأخلاقية، وتطبيقهم لمعايير الاستدامة، رفع کفاءة وتطوير سياسات إدارة الموارد البشرية بالشکل الذي يمکنها من القيام باختيار افضل العناصر من اجل تحقيق استدامة الموارد البشرية، الاهتمام بنشر تقارير متعلقة بمدى احراز تقدم في تطبيق معايير الاستدامة، ربط الترقيات بمدى احراز العاملين لنتائج في قضيتي المناخ الأخلاقي والاستدامة. Summary The research aims to identify the role of the ethical climate in achieving the sustainability of human resources in the Egyptian commercial banks, and the survey list was used as a main tool for data collection, and a list directed to workers was used and the size of the research community reached 73007 individuals, and the research sample reached 383 individuals and our desire to increase the percentage of sample representation For the research community, it increased to 405 items, and the statistical analysis program (SPSS) was used to enter, process and analyze data and test hypotheses. This research reached a set of results, the most important of which are: The effect of a statistically significant impact of the ethical climate change dimension on the sustainability of human resources, statistics of statistical significance among the respondents' opinions on the dimensions of human resource sustainability according to the type of bank ownership. The research presented a group, the most important of which are: Working to improve the ethical climate, and therefore, investing in the public institution is to create good projects, create a good environment, raise the efficiency of employing human resource management policies in a way that works in making a good opinion in employment for the job opinion of the public opinion, attention to the topic Reports related to progress in implementing sustainability standards, upgrades to ethical climate and sustainability.

Bank efficiency estimation in China: DEA-RENNA approach

The current study proposes a new DEA model to evaluate the efficiency of 39 Chinese commercial banks over the period 2010–2018. The paper also, in the second stage, investigates the inter-relationships between efficiency and some bank-specific variables (i.e. bank profitability, bank size, expenses management, traditional business and non-traditional business) under the Robust Endogenous Neural Network Analysis. The findings suggest that the sample of Chinese banks experiences a consistent increase in the level of bank efficiency up to 2015; the efficiency score is 0.915, after which the efficiency level declines and then experiences a slight volatility, while finally ending up with an efficiency score of 0.746 by the end of 2018. We also find that among different bank ownership types, the state-owned banks have the highest efficiency, the rural commercial banks are found to be least efficient and the foreign banks experience the strongest volatility over the examined period. The second-stage analysis shows that bank size exerts a positive influence on the development of non-traditional banking business and a proactive expense management, bank size and non-traditional businesses have a positive impact on efficiency levels, while bank profitability, traditional businesses and expenses management have negative influences on bank efficiency.

What drives the performance of different bank-ownership types in Indonesia? The pre- and post-GFC analysis

PurposeThe Indonesian banks play crucial roles in the economy, especially because of less developed bond and stock markets. It has undergone drastic changes in bank-ownership composition over time. This paper aims to analyze the impact of bank-specific characteristics on the performance of different bank-ownership types in Indonesia to determine whether their profitability drivers differ.Design/methodology/approachFixed-effect panel data regression is applied to 1,649 bank-year observations (97 banks throughout 2003–2019). It encompasses the pre- and post-global financial crisis (GFC) period.FindingsThe findings show that age, liquidity, equity and credit risk are significant determinants of bank performance. The significance of these effects differs for each bank-ownership type and show changes between the pre-GFC and post-GFC periods.Research limitations/implicationsNotwithstanding the merit of this paper, the results are not without limitations. This paper only focuses on one country. Furthermore, the prominence of banks relative to bond and stock markets with consideration of the GDP of countries may result in different findingsPractical implicationsThese findings provide the owners and managers of banks with information that can be applied to compare and assess own bank drivers and performance to enhance their own efficiency. The findings also inform bank authorities and regulators about differences in performance drivers that could be considered in changes to policies aimed at improving the performance of different bank-ownership types.Originality/valueThis paper is a pioneer study that focuses on the drivers of bank performance for different ownership types during the pre- and post-GFC periods in a country where the financial market is overall small and bank credits dominate capital supply.

Implementing strategic disposability for performance evaluation: Innovation, stability, profitability and corporate social responsibility in Chinese banking

The current paper estimates the overall inefficiency indicator of a bank under a network Data Envelopment Analysis (DEA) in the presence of undesirable inputs and outputs. We primarily contribute to the DEA literature in four ways. First, we decompose banks’ overall inefficiency performance indicator into five component indicators, namely, the sub-indicators of innovation, two kinds of stability, profitability and corporate social responsibility. Second, since the proposed model, which is an absolute value optimization problem, does not give the overall inefficiency score directly, we introduce a two-step procedure to obtain all sub-indicator scores and the overall inefficiency score. Third, we extend the by-production framework by proposing not only a concept and interpretation of “strategic disposability” for an intermediate undesirable output in estimating the stability sub-indicators, but also another concept of “strategic disposability” for an intermediate undesirable input in gauging the sub-indicator related to corporate social responsibility. Our results show that 1) the Chinese banking industry has a high level of innovation inefficiency and profitability inefficiency is higher than primary business stability inefficiency, strategic management stability inefficiency and corporate social responsibility inefficiency for all the bank ownership types except the state-owned commercial banks; 2) state-owned commercial banks have a higher level of corporate social responsibility inefficiency compared to the other inefficiencies; 3) state-owned commercial banks, rural commercial banks and joint-stock commercial banks are the best three performers with different ownership types performing well in different perspectives; 4) all different ownership types experience a level of performance volatility over the examined period.

Bank Ownership Types and Liquidity Creation: Evidence from Ghana

ABSTRACT In this study, we examine bank liquidity creation and the effect of ownership types on liquidity creation in Ghana for the first time. The study employs data on 26 banks obtained from Bank of Ghana between 2006 and 2016. Three panel estimation strategies including two-step GMM, Hausman-Taylor and Fixed effect models are employed to arrive at the findings. Employing the narrow liquidity creation computation approach, the results show that average bank liquidity created within the 11-year period consistently increased over the period and reported the highest liquidity created in 2016. Interestingly, when considering bank ownership types, listed, state-owned and foreign-owned banks report the highest average liquidity created compared to their unlisted, privately owned and locally owned counterparts, respectively. Employing regression models, the study finds that foreign and privately owned banks are less likely to create more liquidity compared to their locally and state-owned bank counterparts implying that state-owned and locally owned (domestic) banks create more liquidity. These results imply that while there is much room for creating more liquidity, policymakers may hasten liquidity creation through locally and state-owned banks and at the same time designing policies that entice foreign and privately owned banks to create more liquidity which is good for economic growth.

Main Effects and Interaction Effects of Bank Ownership Types and Bank Core Capital Category to the Bank NPL Performance

Credit management capability is seen as a crucial aspect for banks sustainability. The variable that is directly related to bank credit risk is a non-performing loan (NPL) which is commonly used to assess the asset quality of a bank. The purpose of this research is to analyze main effects and interaction effects of bank ownership types and bank core capital category (BUKU) to the bank NPL performance. The study was conducted using secondary data obtained from bank quarterly reports from the Financial Services Authority (OJK) through the website ojk.go.id, bank financial reports, and infobank magazine. Bank’s performance in the classification of bank ownership types and bank core capital category were evaluated with respect to bank’s NPL which in this case is used as indicator of the bank’s performance. Tests were performed using TWO WAY ANOVA and Post Hoc Test. The findings of this study found that the main effect type of bank ownership had a significant effect on the performance of NPL management, the main effect of banks’ BUKU had no significant effect on the performance of NPL management and the interaction effect of bank type and banks’ BUKU had a significant effect on the performance of NPL management.

Corporate Governance, Risk Management, and Bank Performance: Does Type of Ownership Matter?

This research explains the correlation between corporate governance, risk management, bank performance, and ownership structure. The research has used a set of independent variables related to revelation and precision. The data from 39 banks working in Pakistan have been used for the time period of 2010 to 2015. Two variables are used for risk management including VAR (Value At Risk) and CAR (Capital Adequacy Ratio). Family ownership, managerial ownership, and ownership concentration are used as instrumental variables for ownership structure. Board independence, the board size, CEO, and audit committee are used as proxy variables for corporate governance, whereas, dummy variables are used for bank performance. The results indicate that three types of bank ownerships are the same; therefore, they cannot affect VAR type of bank ownership and compare as a whole with risk management. The regression consequences display that family ownership has an unconstructive outcome on VAR and CAR that show a negative association between the variables. While managerial ownership and concentration ownership show a positive association between VAR and CAR. The results indicate that board size and audit committee has a negative effect on VAR and CAR that means there is a negative relationship between the variables, whereas board size and CEO have a positive relationship with VAR and CAR. Firm size, firm profitability, and growth opportunities represent a variety of bank performance. The results reveal that firm size, firm profitability and growth opportunities have a positive effect on CAR and VAR. The results also indicate that corporate governance has a positive effect on bank performance that means if a bank can adopt good corporate governance rules, the performance will be excellent. The result emphasizes that risk management has a positive correlation with bank performance that means if a bank manages risk, the performance of that bank will be increased. But in Pakistan, the rules and regulations are the same for all types of banks including private, public, and foreign, therefore, the ownership structures of all banks are the same.

Balanced scorecard-based performance assessment of Turkish banking sector with the Analytic Network Process (ANP)

In the last decade, Performance assessment of banking sectors in advanced economies became a prominent issue investment decision. This paper aims to evaluate the balanced-scorecard-based performance of the Turkish banking sector using the Analytic Network Process Approach. Within this scope, all 33 deposit banks were intended to analyze out of 34 banks. Within this scope, we made an analysis in order to determine which perspectives of the balanced scorecard approach are appropriate for each type of bank (state banks, private banks, foreign banks). In this study, we used Analytic Network Process (ANP) approaches so as to achieve this objective. With a balanced-scorecard performance assessment of the banking sector using the ANP approach, all the factor priorities have been extracted and normalized to one for each cluster and final priorities have been obtained. The final priorities and rankings of each perspective of the balanced scorecard and the type of bank ownership have been assessed in the model. According to the results of the analysis, Findings demonstrate that (i) financial factor of balanced scorecard approach has the first rank with 65.7 percent; (ii) Customer perceptive is in the second rank with 22.1 percent. (iii)Third and fourth ranks have close results, (iv) learning and growth stay in the third rank with 6.3 percent (v) internal factor has the weakest importance with 5.9%, (vi) state banks into bank ownership have the highest rank with 53.9 percent, (vii) Private owned banks are the second in the relative performance of the bank groups with 36.1%, (viii) Balanced scorecard based performance of foreign banks are replaced in the last order with approximately 10%.

ANALYZING FINANCIAL PERFORMANCE OF TURKISH DEPOSIT BANKS USING TOPSIS METHOD

Banking industry is indisputably the biggest part of the financial sector in Turkey. Regarding the importance of banking industry, this study aimed to investigate the financial performance of Turkish banking industry for the period between 2012 and 2019 using TOPSIS method. For this purpose, firstly ten banks, which had the highest amount of assets, were ranked using eight criteria since these banks represent a great percentage of the banking industry. Secondly, bank ownership types were analyzed and ranked. The results indicate that there is a decline in the performance of state owned banks. Foreign banks founded in Turkey seemed to be the best performing bank type in the last three years. Moreover, in this set of ten banks, the best bank from 2012 to 2017 was a state owned bank, the best bank in 2018 was a foreign bank founded in Turkey and the best bank in 2019 was a privately owned bank.

Deposit structure, market discipline, and ownership type: Evidence from Indonesia

In this paper, we extend the literature on the discipline imposed by depositors on banks by disentangling the impact of macro risk and micro risk. We also take advantage of a unique dataset in which depositors are split into different categories of deposit size in different types of banks (bank ownership structure). We consider the Banking Stability Index, which is used by the Indonesia Deposit Insurance Corporation as a dashboard to monitor banking stability at the country level as well as individual stability measures such as the Z-score. Using monthly data from 2005 to 2013, our findings show that both macro and micro levels of risk are considered by depositors to discipline banks. Large uninsured depositors are more effective at disciplining banks, highlighting the credibility of the insurance system that is in place. Bank ownership type also matters in explaining the difference in market discipline by depositors.

Bank ownership type and temporal evolution of long‐term bank funding in the period 2005–2017

AbstractThis study uses a large panel dataset of Western European banks to examine the determinants of bank funding stability. Banks are divided into three categories by bank ownership type; the ownership types in this study are commercial banks, cooperative banks and savings banks. Three sources of stable bank funding are investigated: customer deposits, equity, and long‐term liabilities. Furthermore, the sum of these funding components is used as a proxy variable for a bank's total available stable funding (ASF). A special focus is on the temporal evolution of these funding types. The regression results show that commercial banks’ funding became much more stable in the period 2005–2017. However, that funding remains, on average, less stable than does cooperative and savings banks’ funding. In addition, funding stability has remained at the pre‐crisis level in cooperative and savings banks, despite a steep dip in cooperative banks’ ASF during the sovereign debt crisis. Furthermore, banks substantially decreased financing from long‐term liabilities after the financial crisis, replacing it with customer deposits and equity.

Competition in the Indian Banking Sector: A Panel Data Approach

The paper aims to assess the level of competition in the Indian banking sector overall as well as within the three groups of banks: foreign owned, state owned (public sector), and privately owned. We use panel data for the period from 2005–2018. We found that the overall competition in the Indian banking sector is strong, although there are differences by type of bank ownership. The Indian banking market continues to be characterized by monopolistic competition. The various policy measures taken by the Indian government in recent years appear to have helped boost competition. A policy suggestion would be to further liberalize the banking sector for foreign investment.