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1 – 10 of over 4000Nurmadi Harsa Sumarta, Mugi Rahardjo, Kingkin Kurnia Trio Satriya, Edy Supriyono and Prihatnolo Gandhi Amidjaya
This paper aims to find empirical evidence of bank ownership structures on bank reputation through the mediating role of sustainability reporting (SR) in Indonesian banking sector.
Abstract
Purpose
This paper aims to find empirical evidence of bank ownership structures on bank reputation through the mediating role of sustainability reporting (SR) in Indonesian banking sector.
Design/methodology/approach
This paper uses purposive sampling to obtain 279 observations from 43 listed banks in Indonesia Stock Exchange during 2012–2018. This study uses structure equation modelling analysis in the AMOS software and intervening test from the Sobel test to investigate the direct and indirect effect in this research model.
Findings
The empirical results evidence: foreign, government and public ownership exhibit significant positive effect on SR but not with family ownership; SR positively affects bank reputation; SR appears as a mediator in which foreign, government and public ownership have a positive effect on the bank reputation through the indirect effect of SR while family ownership exhibits insignificant result.
Practical implications
The practical contribution of this study is that SR is proven to increase bank reputation through the legitimation from the public, so the management must properly pay attention by publishing this report.
Originality/value
This study provides several novelties to the literature: SR is used as a mediator in the relationships between bank ownership and reputation in which there is very limited studies investigating these aspects, especially in Indonesia. In addition, most SR studies in Indonesia still focus on SR determinants rather than its impact; customer deposits are used as a measurement basis of the bank reputation as it reflects better the trust and perception of the market so that it is relevant with the reputation level.
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This study aims to examine the effect of ownership structure on financial performance of commercial banks in Kenya.
Abstract
Purpose
This study aims to examine the effect of ownership structure on financial performance of commercial banks in Kenya.
Design/methodology/approach
The data were collected from audited financial statements of 39 commercial banks in Kenya for the period 2009–2020.
Findings
Regression results found evidence of ownership structure explaining commercial banks’ financial performance. The results found a negative association between state ownership and net interest margin, a negative association between management ownership and net interest margin and a negative association between institutional ownership and return on assets.
Practical implications
Based on the findings, commercial bank management should therefore devise ownership structure policies that are geared toward boosting their financial performance both in the short run and the long run. Second, this study recommends a minority shareholding of the state in commercial banks to deter political interference, protect investors’ wealth from erosion and allow the majority shareholders to adopt a strong corporate governance mechanism for higher financial performance. Banks with a high percentage of state ownership should consider partial privatization to improve corporate governance practices. Third, banks should adopt a managerial ownership policy limiting the proportion of equity stock held by executives to limit their powers in strategic decision-making. Fourth, this study proposes a percentage limit on the equity stock of an institutional investor to eliminate bureaucracy in strategic decision-making and protect investors’ wealth.
Originality/value
The study finding is meant to inform regulation and operation policies in the banking sector and contribute to the literature on ownership structure, especially in the banking sector.
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The author aims to find value relevance of board characteristics and ownership structures in the banking industry of Bangladesh, an emerging economy with absence of good…
Abstract
Purpose
The author aims to find value relevance of board characteristics and ownership structures in the banking industry of Bangladesh, an emerging economy with absence of good governance.
Design/methodology/approach
Pooled Ordinary Least Square (OLS), fixed effect and generalized method of moments (GMM) methods have been utilized to analyse 5-year data of 28 listed banks.
Findings
All governance indicators except institutional ownership have insignificant impact on return on asset (ROA) and return on equity (ROE). Institutional ownership has significant negative impact indicating that institutional investors can worsen bank performance in unregulated environments. Additional analysis shows significant positive impact of higher institutional ownership ratios.
Research limitations/implications
Small sample from a single industry of one country may limit the applicability of the findings to all developing economies.
Practical implications
During the fast growth periods of developing economies, institutional investors with small stakes may become value destructive due to speculative behaviour.
Originality/value
This is one of the pioneering studies to suggest that governance mechanisms have insignificant, in some instances adverse, impact on firm value in emerging economies.
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Imen Khanchel, Naima Lassoued and Oummema Ferchichi
This study examines the effect of political connections on the performance of banks in the MENA region separately and then moderated by family, institutional and state ownership.
Abstract
Purpose
This study examines the effect of political connections on the performance of banks in the MENA region separately and then moderated by family, institutional and state ownership.
Design/methodology/approach
A hierarchical regression method was used for a sample of 111 banks operating in 10 MENA countries observed from 2009 to 2019.
Findings
The results indicate significant negative relationships between political connections and bank performance. Furthermore, institutional and family ownership moderates this relationship; institutional investors and family shareholders attenuate separately the negative impact of political connections on bank performance. Moreover, state ownership positively moderates this relationship; states as shareholders accentuate the negative relationship between political connections and bank performance. Splitting our sample according to bank-specific features (banks in authoritarian regimes versus hybrid regimes, Islamic banks versus conventional banks) confirms our findings. Our results are robust to an alternative measure of bank performance.
Research limitations/implications
Banks operating in the MENA region have to be aware of the consequence of political connections. In addition, they have to take into account the role of ownership structure when they seek to attenuate the harmful effect of political connections.
Originality/value
This paper offers an in-depth understanding of the impact of political connections on bank performance by drawing from two institutional logics: resource dependence logic and agency logic. Some recommendations on the importance of changing the existing ownership structure are highlighted, encouraging some investors to take part in the capital of banks in this region.
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Muhamad Umar Mai, Ruhadi Nansuri and Setiawan Setiawan
This study aims to examine the influence of ownership structure and board characteristics on the performance of Indonesian Islamic rural banks (IRB) using the system generalized…
Abstract
Purpose
This study aims to examine the influence of ownership structure and board characteristics on the performance of Indonesian Islamic rural banks (IRB) using the system generalized method of moment model.
Design/methodology/approach
This research uses Indonesian IRB unbalanced annual panel data from 2016 to 2022. IRB performance is measured by return on assets (ROA), return on equity (ROE) and nonperforming financing (NPF). The ownership structure is represented by controlling shareholders, ownership of the board of directors (BD) and ownership of the board of commissioners (BC). Meanwhile, board characteristics are represented by the size of the BC, the proportion of female board directors and female president directors.
Findings
The results show that the ownership structure and board characteristics play an important role in improving the IRB’s performance. Technically, the results show that the size of the BC and the ownership of the BD increase all IRB performance measures. Female president directors and controlling shareholders improve IRB’s performance as measured by ROA and ROE. Women’s boards of directors improve IRB performance as measured by NPF. Meanwhile, the ownership of the BC does not show its effect on all IRB performance measures.
Research limitations/implications
This study fills a literature gap on the influence of ownership structure and board characteristics on IRB Indonesia’s performance. In addition, it adds understanding and insight for Islamic bank regulators, management and IRB depositors in Indonesia.
Originality/value
To the best of the authors’ knowledge, this study is one of the first to provide an empirical survey on the influence of controlling shareholders and board characteristics on IRB performance, particularly in Indonesia.
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The purpose of the study is to assess if a policy of female inclusive education should be complemented with a policy of female ownership of bank accounts to fight female…
Abstract
Purpose
The purpose of the study is to assess if a policy of female inclusive education should be complemented with a policy of female ownership of bank accounts to fight female unemployment. The study therefore examines how female ownership of bank accounts moderates the incidence of female education on female unemployment.
Design/methodology/approach
The focus is on 44 sub-Saharan African (SSA) countries for the period 2004–2018 and the empirical evidence is based on interactive quantile regressions. The interactions are tailored such that female ownership of bank accounts influences the effect of female inclusive education on female unemployment.
Findings
From the empirical findings it is evident that female ownership of bank accounts does not effectively moderate female education in order to reduce female unemployment unless complementary policies are considered. The complementary policies should be in view of boosting the interaction between female education and female bank account ownership in increasing employment opportunities for the female gender and by extension, reducing female unemployment. The invalidity of the moderating effect is robust to the inclusion of more elements in the conditioning information set as well as accounting for other dimensions of endogeneity such as simultaneity and the unobserved heterogeneity. Policy implications are discussed.
Originality/value
This study contributes to the extant literature by assessing how female ownership of bank accounts complements female inclusive education to reduce female unemployment.
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Xifang Sun and Liyu Liu
Branching is one of the crucial strategic non-price actions for banks. Previous studies on the impact of state ownership upon banks focus on bank lending behavior. This paper aims…
Abstract
Purpose
Branching is one of the crucial strategic non-price actions for banks. Previous studies on the impact of state ownership upon banks focus on bank lending behavior. This paper aims to offer a novel investigation of how state ownership affects bank branching behavior by examining state-controlled commercial banks (SCCBs) in the context of the largest developing and transitional country China.
Design/methodology/approach
The two-part model (TPM) is applied to analyze the branching decision process. In the first stage, the dependent variable is the choice of bank branching dynamics and in the second stage the dependent variable is the number of new branches or the number of closed branches. For robustness check, the ordered probit selection model allowing for interdependence of the two stage decisions is also employed.
Findings
Using a unique dataset of bank branches in China, this paper finds that the branching decisions of Chinese SCCBs are driven by both profit motivated factors including population size, population density, income level, financial development and banking competition and politically motivated factors as represented with the proportion of SOEs. As a comparison, branching decisions of joint-stock banks in China are fully determined by profit motivated factors.
Originality/value
First, this study is the first to explore the effect of state ownership on bank branching decisions, providing a new insight on the literature regarding to the impact of state ownership on bank decisions. Second, this study explores the potential effect of politically motivated factors on bank branching decisions, filling the gap in bank branching literature. Third, this study can contribute to bank branching literature by enriching the limited understanding of how SCCBs make branching decisions. Lastly, this study applies novel empirical strategies to analyze bank branching decisions, including the TPM and the ordered probit selection model.
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Runze Ling, Ailing Pan and Lei Xu
This study examines the impact of China’s mixed-ownership reform on the innovation of non-state-owned acquirers, with a particular focus on the impact on firms with high financing…
Abstract
Purpose
This study examines the impact of China’s mixed-ownership reform on the innovation of non-state-owned acquirers, with a particular focus on the impact on firms with high financing constraints, low-quality accounting information or less tangible assets.
Design/methodology/approach
We use a proprietary dataset of firms listed on the Shanghai and Shenzhen Stock Exchanges to investigate the impact of mixed ownership reform on non-state-owned enterprise (non-SOE) innovation. We employ regression analysis to examine the association between mixed ownership reform and firm innovation.
Findings
The study finds that non-state-owned firms can improve innovation by acquiring equity in state-owned enterprises (SOEs) under the reform. Eased financing constraints, lowered financing costs, better access to tax incentives or government subsidies, lowered agency costs, better accounting information quality and more credit loans are underlying the impact. Additionally, cross-ownership connections amongst non-SOE executives and government intervention strengthen the impact, whilst regional marketisation weakens it.
Originality/value
This study adds to the literature on the association between mixed ownership reform and firm innovation by focussing on the conditions under which this impact is stronger. It also sheds light on the policy implications for SOE reforms in emerging economies.
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Mohammed Mohi Uddin, Mohammad Tazul Islam and Omar Al Farooque
In this study, the authors explore the effects of politically controlled boards on bank loan performance in both state-owned commercial banks (SCBs) and private sector commercial…
Abstract
Purpose
In this study, the authors explore the effects of politically controlled boards on bank loan performance in both state-owned commercial banks (SCBs) and private sector commercial banks (PCBs) in Bangladesh.
Design/methodology/approach
The data consist of 409 bank-year observations from 46 sample SCBs and PCBs of Bangladesh for the period 2008–17. The authors apply ordinary least squares pooled regression with year fixed effect for baseline econometric analyses and generalized method of moments regression for robustness tests after addressing the endogeneity issue.
Findings
The regression results reveal that the presence of bank “boards controlled by politically affiliated directors” (PA) have significant positive effects on non-performing loans (NPLs). Similarly, the presence of “boards controlled by politically affiliated directors without substantial ownership interests” (PAWOI) show positive association with NPLs. In contrast, the presence of “boards controlled by politically affiliated directors with substantial ownership interests” (PAOI) exhibit an inverse relationship with NPLs. These findings support ‘agency conflict’ arguments and document that both PA and PAWOI are detrimental to bank loan performance in Bangladesh, while PAOI do not have significant effect on increasing NPLs.
Originality/value
This study contributes to the existing bank governance literature by providing evidence from an emerging economy perspective, where politically affiliated directors (PADs) exploit their positions for personal and/or political gain at the cost of other stakeholders by taking advantage of relaxed regulatory oversights and investor protections.
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Muhammad Athar, Sumayya Chughtai and Abdul Rashid
The aim of this study is to understand how board structure, size of audit committee (AC), gender diversity and ownership structure influence banks’ performance in Pakistan. This…
Abstract
Purpose
The aim of this study is to understand how board structure, size of audit committee (AC), gender diversity and ownership structure influence banks’ performance in Pakistan. This study also aims to examine how various dimensions of governance differently affect the different measures of bank performance.
Design/methodology/approach
This study used panel estimation techniques to quantify the impact of various elements of corporate governance on bank performance by taking annual data of 19 Pakistani banks for the period 2013–2020. The corporate governance is measured by board size, CEO duality, AC size, ownership structure and gender diversity. To get the robust results, this study measures bank performance by considering different indicators, namely, return on assets, earning per share, technical efficiency (TE) and total factor productivity. The empirical investigation is based on several well-known and well-accepted governance theories such as the agency theory, the stewardship theory, the tokenism/critical mass theory and the information asymmetry theory.
Findings
The findings of the study reveal that the size of board and ACs both significantly improve profitability and productivity, whereas they decrease TE. Further, the findings suggest that most of the indicators of gender diversity significantly deteriorate the performance of banks. However, ownership structure significantly improves banks’ earnings per share and TE. This study further illustrates that CEO’s duality does not have any significant impact on bank performance. This finding holds true for all the performance measures considered for this study.
Practical implications
The findings are of great importance to various stakeholders, especially to policymakers to know about the factors influencing different measures of performance. Specifically, based on these findings, they can devise the result-oriented strategies to enhance the financial and real performance of banks. The findings also suggest that both investors and owners should take into consideration the governance indicators while evaluating banks’ performance by using accounting, market-based, efficiency and productivity measures.
Originality/value
This research adds to the vast body of existing knowledge about the effectiveness of corporate governance by investigating how the different dimensions of corporate governance and gender diversity influence bank performance in a developing country, namely, Pakistan. Further, this study elaborates the domestic rules/regulations, governance theories and governance framework and practices and tries to link the empirical findings with them for better understanding the role of governance in determining the performance of the banking sector of Pakistan.
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