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Ownership structure and bank performance in EU-15 countries

Carlo Migliardo (Department of Economics, Universita degli Studi di Messina, Messina, Italy)
Antonio Fabio Forgione (Department of Economics, Universita degli Studi di Messina, Messina, Italy)

Corporate Governance

ISSN: 1472-0701

Article publication date: 12 February 2018

Issue publication date: 1 June 2018




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.


This 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.


The 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/implications

The 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.


To 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.



Both authors contributed equally to each section of the article.The authors thank two anonymous referees for their critical comments and suggestions. The usual disclaimer applies.


Migliardo, C. and Forgione, A.F. (2018), "Ownership structure and bank performance in EU-15 countries", Corporate Governance, Vol. 18 No. 3, pp. 509-530.



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