scholarly journals Corporate governance and bank performance: Does ownership matter? Evidence from the Kenyan banking sector

2007 ◽  
Vol 4 (2) ◽  
pp. 133-142 ◽  
Author(s):  
Dulacha G. Barako ◽  
Greg Tower
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Ownership Structure ◽  
Financial Stability ◽  
Banking Sector ◽  
Bank Performance ◽  
Government Ownership ◽  
Statistical Justification ◽  
African Context ◽  
Institutional Shareholders

This paper provides an empirical analysis of banks performance in Kenya. The primary purpose of this study is to investigate the association between ownership structure characteristics and bank performance. Data utilised in the study is collected from the Financial Institutions Department of the Central Bank of Kenya, both on-site inspection reports and off-site surveillance records. Empirical results indicate that ownership structure of banks significantly influence their financial performance. In particular, board and government ownership are significantly and negatively associated with bank performance, whereas foreign ownership is strongly positively associated with bank performance, and institutional shareholders have no impact on the performance of financial institutions in Kenya. The study makes a significant contribution to financial research by extending examination of banks performance to a developing country context beyond the usual confines of the developed western economies, and adds to the small number of similar studies in the African context. The results are consistent with prior research findings, and more importantly, presents statistical justification for pursuing further corporate governance reforms with respect to banks’ ownership structure to enhance the financial stability of the sector

scholarly journals STATE-OWNED RURAL BANK PERFORMANCE: DO GOVERNMENT OWNERSHIP AND CORPORATE GOVERNANCE UNIQUENESS MATTER?

2016 ◽  
Vol 13 (2) ◽  
pp. 109
Author(s):  
Azilsyah Noerdin
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Ownership Structure ◽  
Important Implication ◽  
Bank Performance ◽  
Government Ownership ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
The Difference ◽  
Privately Owned

It has been widely recognized that ownership structure has an impact on firm performance. This paper examines whether rural banks owned by government have poorer performance than those owned by private parties with the emphasis on corporate governance uniqueness of state-owned rural banks. 42 rural banks in Indonesia has been selected as the sample. MANOVA test is used to investigate the difference performance between the two types of the rural banks. The results show that state-owned rural banks perform poorer than their privately-owned counterparts. It is indicated by lower ROA ratio and higher OEOI and NPL ratios. The important implication of this finding suggets that government ownership impede boards of rural banks to implement good corporate governance practices in order to improve their banks performance.

Effects of board and ownership structure on corporate performance

2014 ◽  
Vol 4 (1) ◽  
pp. 117-130 ◽  
Author(s):  
Houda Arouri ◽  
Mohammed Hossain ◽  
Mohammad Badrul Muttakin
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Positive Association ◽  
Bank Performance ◽  
Corporate Boards ◽  
Governance Mechanism ◽  
Government Ownership ◽  
Significant Positive Association ◽  
Content Type ◽  
Gcc Countries

Purpose – The purpose of this paper is to examine the effect of ownership structure and board composition on bank performance as measured by Tobin's Q and market to book value in Gulf Co-Operation Council (GCC) countries. Design/methodology/approach – A dataset of 58-listed banks of GCC countries for the period 2010 is used. The methodology is based on multivariate regression analysis. Findings – The result shows that the extent of family ownership, foreign ownership and institutional ownership has a significant positive association with bank performance. However, government ownership does not have a significant impact on performance. Other governance variables such as CEO duality and board size appear to have an insignificant impact on performance. Practical implications – Better corporate governance mechanisms are imperative for every company and should be encouraged for the interest of the investors and other stakeholders. The study implies that ownership by corporate governance is more effective for GCC countries. The study also suggests that unlike in western countries, corporate boards may not be an effective corporate governance mechanism in GCC countries. Originality/value – The paper extends the findings of the corporate governance and bank performance relationship in GCC countries that are neglected in the previous literature.

scholarly journals The Effect of Multiple Large Shareholders on Banks’ Profitability and Risk

2021 ◽  
Vol 13 (4) ◽  
pp. 1888
Author(s):  
Maria Gaia Soana ◽  
Laura Barbieri ◽  
Andrea Lippi ◽  
Simone Rossi
Keyword(s):  
Corporate Governance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Positive Impact ◽  
Corporate Structure ◽  
Academic Literature ◽  
Large Shareholders ◽  
Bank Ownership ◽  
Institutional Shareholders

The wide-ranging academic literature on corporate governance in the banking sector includes only a few studies on bank ownership and, specifically, on the comparative power of shareholders within the corporate structure. This paper reports an investigation into the presence of multiple large shareholders and their influence on profitability and risk in the long-term, considering a sample of 697 U.S. and European listed commercial banks from 2008 to 2018. It was found that the number of large and institutional shareholders has a positive impact on profitability, but no effect on risk. However, long-term ownership by multiple large shareholders contributes to decreasing risk in banks.

Ownership structure and financial performance in Islamic banks

2014 ◽  
Vol 7 (2) ◽  
pp. 146-160 ◽  
Author(s):  
Sarra Ben Slama Zouari ◽  
Neila Boulila Taktak
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Ownership Structure ◽  
Policy Implications ◽  
Bank Performance ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
The Impact

Purpose – This study aims to investigate empirically the relationship between ownership structure (concentration and mix) and Islamic bank performance, with a special attention to the identity of the block investor (foreign, family, institutional and state). Design/methodology/approach – Regression analyses are conducted to test the impact of the identity of the first shareholders and the degree of concentration on Islamic bank performance, using a panel data sample of 53 Islamic banks scattered over > 15 countries from 2005 to 2009. Findings – Results suggest that ownership is concentrated at 49 per cent, and for 41 banks from the full sample, the ultimate owner is institutional. State investors come in second place, followed by family ultimate shareholders. Using return on assets and return on equity as performance measures, empirical evidence highlights the absence of correlation between ownership concentration and Islamic bank performance. It also reveals that the combined effort of family and state investors is beneficial to bank performance. Results also indicate that banks with institutional and foreign shareholders do not perform better. Empirical findings suggest that the financial crisis impacts negatively Islamic bank performance. Research limitations/implications – The use of dummy variables to measure the nature of the largest owner represents the main limitation of this study. This is due to the lack of information, as the percentage of the largest capital held referring to owner category was available only for some banks. Practical implications – This research has given a brighter insight into corporate governance and bank performance in selected Islamic banking institutions. Findings provided useful information to bank managers, investors and policy makers. Financial performance can be improved by identifying practices associated with ownership structure. So, it will have policy implications for Islamic banks as to how to improve their performance. Finally, different types of bank ownership have had different concerns about implementing corporate governance practices among Islamic banks. Originality/value – This work is the first of its kind for Islamic banks. It extends previous research by examining whether ownership structure (concentration and mix) affects performance. It also fills the gap in the literature by providing empirical evidence on a large sample involving data from 15 countries. Finally, manual data collection on ownership structure constitutes a large part of the research for this paper.

scholarly journals FINANCIAL CRISIS, MACROPRUDENTIAL POLICIES AND DEPOSITOR DISCIPLINE

2017 ◽  
Vol 62 (01) ◽  
pp. 5-25 ◽  
Author(s):  
AHMET FARUK AYSAN ◽  
MUSTAFA DISLI ◽  
HUSEYIN OZTURK
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Banking Sector ◽  
Positive Impact ◽  
Bank Performance ◽  
Macroprudential Policies ◽  
Bank Behavior ◽  
Depositor Discipline

This paper examines to what extent macroprudential policies in the Turkish banking sector affected the functioning of depositor discipline. Our results suggest that depositors’ responses for poor bank performance get stronger after the 2008 crisis, when various macroprudential measures were implemented to preserve financial stability. In the aftermath of the crisis, bank behavior toward depositors also alters. Ahead of the crisis, banks did not significantly respond to the discipline exerted by depositors, however, banks begin offering higher rates to curb deposit withdrawals afterwards. Our findings suggest that the implementation of macroprudential tools seem to have a positive impact on financial stability, since, in the post-2008 period, regulatory supervision have been more firmly assisted by the market.

scholarly journals Importance of Corporate Governance: Evidence from Kosovo’s Banking Sector

2021 ◽  
Vol 23 (2) ◽  
pp. 5-32
Author(s):  
Esat A. Durguti ◽  
◽  
Nexhat Kryeziu ◽  
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Banking Sector ◽  
Good Practice ◽  
Secondary Data ◽  
Financial Indicators ◽  
Dynamic Approach ◽  
Net Interest Margin ◽  
Dependent Variables ◽  
The Impact

This study identifies and assesses the impact and effect of corporate governance (CG), as a good practice mechanism, as well as some specific financial indicators on the performance of the banking sector in Kosovo. The data used in the research are defined as secondary data that include nine (9) commercial banks and cover the period 2013–2020. The analysis applied to data processing is the dynamic approach through 2SLS estimation for the dependent variables ROA, ROE, and NIM. The results obtained at the end of the study show that all variables applied in this research, depending on the variable defined for evaluation, have a significant impact on the performance of the banking sector. The results also show that the most adequate measure for assessing a bank’s performance is the net interest margin (NIM). This research paves the way for debate and discussion on the governing structures of financial institutions and policymakers.

scholarly journals Pengaruh Islamic Corporate Governance dan Islamic Social Reporting terhadap Kinerja Keuangan Bank Syariah di Indonesia

2021 ◽  
Vol 1 (1) ◽  
pp. 11-20
Author(s):  
Ibnu Trilaksono ◽  
◽  
Agrianti Komalasari ◽  
Chara Pratami Tidespania Tubarad ◽  
Yuliansyah Yuliansyah ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Commercial Bank ◽  
Banking Sector ◽  
Stock Exchange ◽  
Social Reporting ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Exchange Contribution

Abstract Purpose: This study examined the effect of Islamic Corporate Governance and Islamic Social Reporting on the Financial Performance of Islamic Banks in Indonesia at Sharia Commercial Bank Companies Listed on the Indonesia Stock Exchange. Research methodology: This study used multiple regression as the method to analyze the result of the research. By using 14 shariah banking data, this research will analyze the performance of the Indonesian general bank. Result: This study indicates that the variables that affect Islamic bank performance in this research are not implemented effectively. Limitations: The sample of this study was only 14 Islamic commercial banks and only used the Islamic banking sector in Indonesia, which is listed on the Indonesia stock exchange. Contribution: This research is helpful for further research. One of the guidelines in choosing which variabels to use and which one to use in the study should be understood in selecting Islamic financial performance.

scholarly journals Corporate governance and performance of financial institution

2019 ◽  
Vol 16 (1-1) ◽  
pp. 203-216 ◽  
Author(s):  
Juliet Wakaisuka-Isingoma
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Institutions ◽  
Ownership Structure ◽  
Information Disclosure ◽  
Positive Relationship ◽  
Developing Economies ◽  
Cross Sectional ◽  
Financial Transparency

The role of banking and insurance as an animated component of any economy has been widely recognized in the evolution of literature (Shrutikeerti & Amlan, 2017). The financial liberalization efforts taken by various developing economies had the central bearing on their financial institutions (Shrutikeerti & Amlan, 2016). The development of insurance and banking sectors play an important role in stimulating financial development and consequently the growth of the economy. Enhancing firm performance predicted through ownership structure, information disclosure, financial transparency and board profile safeguards reputation, yields effective risk management systems and yet helps firms achieve their business objectives. The study employed a sample of 103 financial institutions and adopted a descriptive cross-sectional survey design with a Pearson correlation coefficient. Reliability, validity and exploratory factor analysis with principal components and Cronbach’s alpha as well as hierarchical regression was reasonable for analysis but also directed using the Partial Least Square (PLS) modelling which was helpful in attesting the measurement and structural models appropriate for the performance of financial institutions. Reveal a statistically significant and positive relationship between corporate governance and firm performance. PLS modelling assented the structural and measurement models and recognized that corporate governance is statistically significant and predict firm performance through its different constructs of information disclosure, financial transparency, and ownership structure and board profile. Equally, firm performance demonstrated that management efficiency, earnings quality, asset quality, capital adequacy and liquidity were key dimensions. The study was cross-sectional and a longitudinal study is necessary to understand the dynamics of corporate governance and firm performance over a period of time. The results extend the understanding of the role of corporate governance in promoting firm performance in financial institutions. Additionally, the results add evidence to the growing body of research focusing on interdisciplinary aspects as well as the relationship between corporate governance and firm performance. Overall, there is a significant positive relationship between corporate governance and firm performance.

FINANCIAL LITERACY AND FINANCIAL INCLUSION EFFECTS ON STABILITY AND COMPETITIVENESS INDICATORS IN THE BANKING SECTOR: CROSS COUNTRY EVIDENCE FOR AFRICA AND THE WORLD

2021 ◽  
pp. 2150009
Author(s):  
JOÃO JUNGO ◽  
MARA MADALENO ◽  
ANABELA BOTELHO
Keyword(s):  
Credit Risk ◽  
Interest Rates ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Financial Stability ◽  
Banking Sector ◽  
Financial Education ◽  
Financial Inclusion ◽  
The Stability ◽  
The Impact

Financial inclusion has allowed financial products with very high-interest rates and complex conditions to become increasingly affordable. Financial inclusion programs, which aim to reach all social strata, strongly expose financial institutions to risk and particularly credit risk. That said, additional interventions such as financial education of those included are needed. We aim to examine the impact of financial literacy and financial inclusion of households on bank performance. Specifically, we want to examine the impact of financial literacy on credit risk, competitiveness among banks and financial stability. The FGLS estimation results suggest that financial literacy and financial inclusion reduce credit risk and enhance the stability of banks, and regarding competitiveness, our results were inconclusive as they show different effects for each competitiveness indicator, although they point to improved competitiveness in some cases. This research allows policymakers to understand that individual financial attitudes can be reflected in the general welfare of financial institutions and encourages the intensification of programs aimed at improving household financial literacy.

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