Download or read book Influence of Board and Ownership Structure on Bank Profitability written by Predrag Stancic and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the impact of board and ownership structure on profitability of 74 commercial banks from four transition economies of South East Europe over the 2005-2010 period. We analyse this relation using Ordinary Least Squares regression analysis on an unbalanced panel data-set of 377 observations. We find negative and significant relationship between board size and bank profitability, while the proportion of independent directors on the board is negatively, but insignificantly related to bank profitability. Impact of ownership concentration on bank profitability is negative, but weak. We also find that privately held domestic banks outperform state-owned and foreign banks. Important factors influencing bank profitability in South East Europe are also bank size and bank capitalisation.

Download or read book Determinants of Commercial Bank Interest Margins and Profitability written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 1998 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.

Download or read book The Effects of Corporate Governance on Bank Performance written by and published by . This book was released on 2014 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Whereas banks operate under different management, board of directors, ownership structures, and government regulations, there is no specific optimal corporate governance model that may be applied to all banks. This study investigates the effect of internal corporate governance mechanisms such as board structure, ownership structure, and audit function as well as other variables such as bank size and bank age on bank financial performance. The sample of the study comprises of both conventional and Islamic banks operating in the seven Arabian Peninsula countries, namely Yemen and the Gulf Cooperation Council (GCC) countries, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates. Regression analysis (OLS) is used to test the aforementioned effect. The results of this study reveal that there is a significant relationship between corporate governance and bank profitability. Board meetings and bank age have positive and significant effects on ROE. Meanwhile, board independence and bank size have negative and significant effects on ROA. In addition, while bank age and board committees have positive effects on Profit Margin, ownership concentration has a negative effect on this profitability measure. These results are consistent with previous studies. However, the literature indicate that the correlation between corporate governance and bank performance is still not clearly established and that impact of corporate governance on bank financial performance in developing countries is still relatively limited.

Download or read book Bovernance and Bank Valuation written by Gerard Caprio and published by World Bank Publications. This book was released on 2003 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Which public policies and ownership structures enhance the governance of banks? This paper constructs a new database on the ownership of banks internationally and then assesses the ramifications of ownership, shareholder protection laws, and supervisory/regulatory policies on bank valuations. Except in a few countries with very strong shareholder protection laws, banks are not widely held, but rather families or the State tend to control banks. We find that (i) larger cash flow rights by the controlling owner boosts valuations, (ii) stronger shareholder protection laws increase valuations, and (iii) greater cash flow rights mitigate the adverse effects of weak shareholder protection laws on bank valuations. These results are consistent with the views that expropriation of minority shareholders is important internationally, that laws can restrain this expropriation, and concentrated cash flow rights represent an important mechanism for governing banks. Finally, the evidence does not support the view that empowering official supervisory and regulatory agencies will increase the market valuation of banks"--NBER website

Download or read book The Relationship Between Board Diversity Ownership Structure and Bank Performance In Tunisian Market written by Wissem Daadaa and published by . This book was released on 2019 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: This research focuses on the impact of internal governance mechanisms on the performance of listed Tunisian banks during the period 2005-2016. We try to detect the impact of banking governance, not only through the ownership structure but also through the board of director's characteristics, on the banking performance. Our results confirm the importance of board control within the bank, but they also state that there are other mechanisms such as the ownership structure that must also be taken into account. Research shows that the ownership concentration, board size, independent and institutional administrators affect bank performance. Likewise, Duality is positively associated with the bank profitability.

Download or read book Ownership Structure and Bank Performance in EU 15 Countries written by Carlo Migliardo and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this paper is to investigate the impact of ownership structure on bank performance in EU-15 countries. Specifically, it examines to what extent shareholder type and the degree of shareholder concentration affect the banks' profitability, risk and technical efficiency.Design/methodology/approachThis study uses a sample of 1,459 banks operating in EU-15 countries from 2011 to 2015. It constructs a set of continuous variables capturing the ownership nature, the concentration and their interactions, and estimates an instrumental variable random effect (IV-RE) model. In addition, a panel data stochastic frontier analysis is conducted to estimate the time-varying technical efficiency for profitability and costs.FindingsThe empirical analysis shows that bank performance is affected by shareholder type. When regressed against the entrenchment behavior of the controlling owner hypothesis, banks with large-block shareholders are more profitable, less risky and more profit efficient. Further, ownership concentration reverts the negative effect related to the institutional, bank and industry ownership.Research limitations/implicationsThe results support the hypothesis that concentrated ownership helps to overcome agency problems. They also confirm that managerial involvement in banks' capital enhances a bank's profit and its volatility.Originality/valueTo the best of the authors' knowledge, this is the first study to consider the ownership nature, the concentration and their interaction using continuous variables, which allows for more precise inferences. The results provide new evidence that bank profitability, cost efficiency and risk are affected by the type of direct shareholders.

Download or read book The Effect of Ownership on the Determinants of Profitability in the Russian Banking Sector written by Iryna Dubylovska and published by Grin Publishing. This book was released on 2016-07-21 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2013 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 70/100, University College London, course: Business Economics, language: English, abstract: This paper examines variations in the return on assets (ROA), return on equity (ROE), net interest margin (NIM), and operating cost ratio (OCR) determinants across ownership structures in 350 Russian banking institutions over the years 2002 to 2012. It is innovative in three ways: firstly, it brings together financial and corporate governance indicators as explanatory variables; secondly, it uses an extensive number of dependent and explanatory variables compared with previous studies on Russia; thirdly, it classifies the ownership of banking institutions using the definition of majority ownership at 20% level. The findings suggest that there are some differences in the determinants of bank's profitability by ownership type: personnel cost ratio and bank portfolio composition ratio dominate in state-influenced banks; capitalisation, reserves and default risk ratios dominate in domestic private-owned banks; and capitalisation ratios dominate in foreign-owned banks. Operating efficiency and credit risk are important factors influencing performance across all ownership types. Furthermore, control variables such as inflation, GDP growth, the size of the banking sector, and the bank asset share ratio are significant, suggesting that they play an important role in the profitability of a bank. Corporate governance variables such as Bureau van Dijk (BVD) independence ranking and listing on an exchange are found to be insignificant. The location of a bank (central or regional) is an important factor influencing its operating cost ratio. The conclusion is that bank ownership plays an important role in Russia and should not be ignored when analysing performance determinants.

Download or read book Global Challenges and Strategic Disruptors in Asian Businesses and Economies written by Ordóñez de Pablos, Patricia and published by IGI Global. This book was released on 2020-09-25 with total page 358 pages. Available in PDF, EPUB and Kindle. Book excerpt: Strategic disruptors in companies and economies, including blockchain technology, big data, and artificial intelligence, can contribute to the creation of new business opportunities, jobs, and growth. Research is needed on the impacts of these disruptors in Asia, as well as analyses on new business ecosystems and policy implications. Global Challenges and Strategic Disruptors in Asian Businesses and Economies presents a rich collection of chapters that explore and discuss the state of the art, emerging topics, challenges, and success factors in business, big data, innovation, and technology in Asia. The book explores how the internet of things, big data, and artificial intelligence can provide solutions for global challenges and companies. Including topics on digital economy, strategic management, and information technologies, this book is ideal for managing directors, general managers, corporate heads of firms, politicians, executives, entrepreneurs, academicians, decision makers, policymakers, researchers, and students looking to enhance their understanding and collaboration in business, disruptive innovation, and technology in Asia.

Download or read book Impact of Corporate Governance on Banks written by and published by . This book was released on 2018 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is no specific optimal corporate governance model that may be applied to all banks since banks operate under different management, board of directors, ownership structures, and government regulations. This study examines the impact of internal corporate governance mechanisms such as board structure, ownership structure, and audit function as well as other variables such as bank size and bank age on bank financial performance. The sample of the study consists of both conventional and Islamic banks operating in Yemen and the six Gulf Cooperation Council (GCC) countries, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates. Regression analysis (OLS) is used to test the aforementioned impact. The results of this study show that there is a significant relationship between internal corporate governance and bank financial performance. Board meetings and bank age have positive and significant impacts on ROE. Meanwhile, board independence and bank size have negative and significant impacts on ROA. In addition, bank age and board committees have positive impacts on Profit Margin while ownership concentration has a negative impact on this profitability measure. These results are consistent with previous studies. However, the literature indicate that the above correlation and consequent impact of internal corporate governance mechanisms on bank performance in developing countries are still not clearly established.

Download or read book The Effect of Corporate Governance on Bank Financial Performance written by Mohamed Basuony and published by . This book was released on 2015 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the effect of internal corporate governance mechanisms and control variables, such as bank size and bank age on bank financial performance. The sample of this study comprises of both conventional and Islamic banks operating in the seven Arabian Peninsula countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, and Yemen. Regression analysis (OLS) is used to test the effect of corporate governance mechanisms on bank financial performance. The results of this study reveal that there is a significant relationship between corporate governance and bank profitability. Board size, board activism, number of outside directors, and bank age significantly affect Tobin's Q. Meanwhile, ROA and PM are affected by ownership concentration, audit committee, audit committee meetings, and the age & size of the bank. The results are consistent with previous literature that the correlation between corporate governance and firm performance is still not clearly established and that impact of corporate governance on bank financial performance in developing countries is still relatively limited.

Download or read book The Corporate Governance of Banks written by Ross Levine and published by World Bank Publications. This book was released on 2004 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Levine examines the corporate governance of banks. When banks efficiently mobilize and allocate funds, this lowers the cost of capital to firms, boosts capital formation, and stimulates productivity growth. So, weak governance of banks reverberates throughout the economy with negative ramifications for economic development. After reviewing the major governance concepts for corporations in general, the author discusses two special attributes of banks that make them special in practice: greater opaqueness than other industries and greater government regulation. These attributes weaken many traditional governance mechanisms. Next, he reviews emerging evidence on which government policies enhance the governance of banks and draws tentative policy lessons. In sum, existing work suggests that it is important to strengthen the ability and incentives of private investors to exert governance over banks rather than to rely excessively on government regulators. These conclusions, however, are particularly tentative because more research is needed on how legal, regulatory, and supervisory policies influence the governance of banks. This papera product of the Global Corporate Governance Forum, Corporate Governance Departmentis part of a larger effort in the department to improve the understanding of corporate governance reform in developing countries"-- World Bank web site.

Download or read book Corporate Governance and Firm Performance The Role of Transparency and Disclosure in the Banking Sector of Pakistan written by Muhammad Arslan and published by . This book was released on 2015-07-16 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Scientific Essay from the year 2014 in the subject Business economics - Miscellaneous, language: English, abstract: The purpose of this paper is to empirically examine the relationship between transparency and disclosure and firm performance. Highlighting the importance of corporate governance in banking sector, the paper has focused in depth over its role, level and its impact on performance in banking industry of Pakistan. The paper access this purpose by constructing transparency and disclosure index for the past five year 2007-2011, using proxies for three sub-categories which are board and management structure disclosure, ownership structure disclosure and financial transparency disclosure. The paper also investigated structural changes of T&D Index and its effect on bank financial performance over the sample of 30 banks operating in Pakistan. Empirical analysis results by using ordinary least square regression model, reveals that financial performance is positively related to the transparency and disclosure and their sub levels except ownership structure disclosure which has negative relation with both ROA and ROE. Furthermore the average T&D level in Pakistani banking sector is above average. The current research paper aims for important policy implementation to reduce information asymmetry and improve corporate governance and firm performance in banking sector of Pakistan.

Download or read book Corporate Governance and Bank Performance written by and published by World Bank Publications. This book was released on 2005 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: "The authors jointly analyze the static, selection, and dynamic effects of domestic, foreign, and state ownership on bank performance. They argue that it is important to include indicators of all the relevant governance effects in the same model. "Nonrobustness" checks (which purposely exclude some indicators) support this argument. Using data from Argentina in the 1990s, their strongest and most robust results concern state ownership. State-owned banks have poor long-term performance (static effect), those undergoing privatization had particularly poor performance beforehand (selection effect), and these banks dramatically improved following privatization (dynamic effect. However, much of the measured improvement is likely due to placing nonperforming loans into residual entities, leaving "good" privatized banks."--World Bank web site.

Download or read book Financial Structure and Bank Profitability written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 2000 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Countries differ in the extent to which their financial systems are bank-based or market-based. The financial systems of Germany and Japan, for example, are considered bank-based because banks play a leading role in mobilizing savings, allocating capital, overseeing investment decisions of corporate managers, and providing risk management vehicles. The systems of the United States, and the United Kingdom are considered more market-based. Using bank-level data for a large number of industrial and developing countries, the authors present evidence about the impact of financial development, and structure on bank performance. They measure the relative importance of bank or market finance by the relative size of stock aggregates, by relative trading or transaction volumes, and by indicators of relative efficiency. They show that in developing countries, both banks and stock markets are less developed, but financial systems tend to be more bank-based. The richer the country, the more active are all financial intermediaries. The greater the development of a country's banks, the tougher is the competition, the greater is the efficiency, and the lower are the bank margins, and profits. The more under-developed the stock market, the greater are the bank profits. But financial structure per se does not have a significant, independent influence on bank margins, and profits.

Download or read book The Impact of Market Structure and the Business Cycle of Bank Profitability written by Małgorzata Pawłowska and published by . This book was released on 2015 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Structure and Bank Profitability written by Asli Demirgüç-Kunt and published by . This book was released on 2016 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: For countries with underdeveloped financial systems, a move toward a more developed financial system reduces bank margins and profitability. Controlling for both bank and market development, financial structure per se - the development of banks relative to that of markets-appears to have no independent effect on bank performance.Countries differ in the extent to which their financial systems are bank-based or market-based. The financial systems of Germany and Japan, for example, are considered bank-based because banks play a leading role in mobilizing savings, allocating capital, overseeing investment decisions of corporate managers, and providing risk management vehicles. The systems of the United States and the United Kingdom are considered more market-based.Using bank-level data for a large number of industrial and developing countries, Demirguc-Kunt and Huizinga present evidence about the impact of financial development and structure on bank performance. They measure the relative importance of bank or market finance by the relative size of stock aggregates, by relative trading or transaction volumes, and by indicators of relative efficiency.They show that in developing countries both banks and stock markets are less developed, but financial systems tend to be more bank-based. The richer the country, the more active are all financial intermediaries.The greater the development of a country's banks, the tougher is the competition, the greater is the efficiency, and the lower are the bank margins and profits.The more underdeveloped the stock market, the greater are the bank profits. But financial structure per se does not have a significant, independent influence on bank margins and profits.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study financial structure and development. The study was funded by the Bank's Research Support Budget under the research project Financial Structure and Economic Development (RPO 682-41). The authors may be contacted at [email protected] or [email protected].

Download or read book The Impact of Changes in Bank Ownership Structure Around the World written by Alvaro G. Taboada and published by . This book was released on 2008 with total page 141 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: Large scale bank privatizations over the last ten years have resulted in vast changes in the ownership structure of banking sectors throughout the world. This dissertation explores both the macro and micro level effects of these changes in bank ownership structure. The first essay explores how changes in bank ownership structure affect capital allocation efficiency within countries. I find that the decline in government ownership of banks by itself does not have any impact on capital allocation efficiency; rather, what matters is whether foreigners or large domestic shareholders acquire the stakes relinquished by the government. Increases in domestic blockholder ownership of banks adversely affect the allocation of capital through increased lending activity to less productive industries, while increased foreign presence improves capital allocation efficiency by directing credit to more productive sectors and to industries that rely more on external financing. In the second essay I explore how changes in bank ownership structure affect the performance of individual banks and the banking sector. The primary contribution of this essay is to examine the role of large domestic blockholders on bank performance. I find that increases in large domestic blockholder ownership of banks are associated with poor subsequent performance in terms of asset quality, profitability, and bank value. In contrast, increases in foreign ownership lead to improvements in profitability and bank value, consistent with prior findings. Government ownership of banks continues to affect bank performance adversely. Finally, increased presence of large domestic blockholders in the banking sector has a positive spillover effect on banking sector asset quality and profitability, while increased foreign presence is no longer associated with improvements in the competitiveness of the banking sector, contrary to what prior studies have found.