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This paper studies the impact of ownership structure on performance in European banking both prior and during the recent crisis. We use a panel of European banks during the period 1996–2011 and utilize random effects estimations in order to identify differences in bank performance (profitability, loan quality, and cost efficiency) due to differences in ownership structure. Both stakeholder and shareholder banks have distinct advantages, shareholder banks showing better profitability before the crisis but stakeholder banks having higher loan quality before and during the crisis. Differences in profitability and loan quality between stakeholder and shareholder banks before the crisis are especially pronounced in countries that experienced a banking crisis after 2007. There is strong a heterogeneity in performance between different stakeholder ownership groups. With the exception of private savings banks, profitability and loan quality of stakeholder banks has improved relative to that of general shareholder banks during the crisis years. The paper contributes to the previous literature by comparing pre-crisis and crisis performance and includes more refined ownership classifications. The results indicate that the survival of the stakeholder model is due to its competitive advantages. Our findings provide support for those arguing that the diversity of organizational structures is worth preserving. Ownership pluralism should become a policy objective in the banking industry.

The purpose of this paper is to examine the effect of bank specific, financial structure and macroeconomic factors on the shareholder value of banks in GCC economies during 2000–2017.

To estimate the model and analyze the data collected from the BankScope and World Bank World Development Indicator database, the author uses static panel estimation techniques as well as two-step difference and system dynamic generalized method of moments estimator.

The results show that banks that are highly dependent on non-traditional activities have higher shareholder value. Higher opportunity cost, capitalization and demand deposits result in a better bank shareholder value. Furthermore, banks with higher loan exposure and growth have better shareholder value. Non-performing loans and market risk have insignificant effects on bank shareholder value. However, GCC banks suffer from diseconomies of scale and scope. The author also finds that banks located in countries with high inflation rates, high rates of interest or in financially developed economies offer better shareholder value. High credit to the private sector reduces the bank shareholder value. The paper also provides evidence that the impact of financial turmoil on the shareholder value of the GCC banking sector is negative and significant and has severely weakened the GCC banking system.

The results of this study necessitate formulation of various policy measures that can counter the effects of shareholder value of banks.

The present study is among the first to address the influence of financial turmoil on bank shareholder value. It also studies new variables, such as demand deposits, non-performing loans, loan growth, non-interest revenue and off-balance sheet activities, which have not been examined in relation to bank shareholder value. It also applies both static techniques and dynamic panel estimation techniques to analyze the data. The analysis is carried out at the aggregate level as well as at the national level and also provides several robustness analyses using various model specifications.

The purpose of this paper is to examine the impact of legal protection of bank minority shareholders (noncontrolling shareholders) and bank creditors (e.g. depositors or debt-holders) on bank dividend payout policies using a panel data set of 5,918 banks from 52 countries over the period 1998-2007, after controlling for country-level deposit insurance coverage and bank- and country-level regulatory pressures.

Tobit panel regression models are used to examine the impact of legal protection of shareholders and creditors on bank dividend payout amounts. And, logit panel regression models are used to examine the impact of legal protection of shareholders and creditors on banks’ likelihood to pay dividends.

The authors support the outcome hypothesis by finding that banks pay higher amount of dividends and, are more likely to pay dividends in strong minority shareholder protection countries. However, the authors reject the substitute hypothesis by finding that banks pay higher dividends and are more likely to pay dividends in weak creditor rights countries, and banks do not substitute weak creditor rights with lower dividend payout amounts. Contrary, the authors support the literature which argues the importance of creditor rights for capital market development because one possible reason for low dividend payouts in strong creditor rights countries could be that the banks retain more profits for extending more loans.

By finding that creditor rights index has a negative relation with bank dividend policies in contrast to its positive relation with nonfinancial firms’ dividend policies, the authors support the literature which argues that managers of banks give less importance to factors such as current degree of financial leverage, the contractual constraints such as dividend restrictions in debt contracts, and the financing considerations such as the cost of raising external funds, while deciding about the dividend payments. The authors also suggest to keep financial and nonfinancial firms separate, to better understand the dividend puzzle.

Extant literature recognizes that legal institutions such as shareholder protection and creditor rights affect corporate firms’ dividend policies significantly but largely excludes banking sector. This paper, by examining the relations between legal protection of shareholders and creditors and bank dividend policies, fills this research gap.

The aim of this paper is to examine whether multiple large shareholders and their interactions affect bank profitability in the MENA region.

To achieve this goal, we used a sample of conventional banks in the MENA region observed during the period 2004–2015. We performed the System Generalized Method of Moment as the empirical approach.

Empirical results indicate that under the dispersion hypothesis, multiple large shareholders (MLS) tend to reduce bank profitability for both return on assets (ROA) and return on equity (ROE). However, under the alignment of interests’ hypothesis, coalition between the first and the second largest shareholder increases bank profitability only for ROA. We also find that an additional large shareholder, beyond the two largest, reduces bank return equity.

To the best of our knowledge, to date, there is no study that investigates the effect of MLS and the bank profitability in the MENA region. Indeed, this study shows the importance of considering ownership composition among large shareholders in banking studies.

The purpose of this paper is to examine the impact of minority foreign ownership on the risk taking behavior and performance of domestic banks in a country where foreign ownership restrictions are imposed.

Mainly controlled by family business groups, the authors examine the extent by which the presence and the level of foreign ownership and voting rights affect domestic bank behavior.

The results show that compared with those purely domestic-owned, banks with foreign shareholdings have lower levels of insider lending and have higher loan portfolio quality. Moreover, the authors find an increase in foreign voting rights effective in raising risk-adjusted returns and in lowering default risk. This positive effect on performance, however, ceases at higher levels of control manifested by the majority domestic shareholder.

Overall, this study shows that there are significant benefits derived from minority foreign shareholder presence in Philippine domestic banks.

This paper contributes to the debate of whether it may be beneficial to reduce or completely lift the foreign ownership restrictions imposed on the banks in the country.

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.

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.

In this paper, two different ownership structures in Belgian banks are studied to see whether this had an impact on how these banks went through the financial crisis of 2007-2008. On the one hand, there is the concentrated ownership structure with a number of major shareholders, while on the other hand, the ownership can be really dispersed with no shareholder having a significantly large stake and ability to influence management’s decisions.

The authors study three large Belgians banks. Dexia and KBC followed the first model (concentrated ownership), while Fortis’ ownership was really dispersed since the year 2000. The authors perform several interviews with people involved with these banks during the crisis and analyze several external sources of information.

The mitigating impact that major shareholders could have had on the – in hindsight – wrong decisions of Belgian banks’ top managers is found to be very limited. Therefore, it can be concluded that the dispersed ownership structure of Fortis was not an important factor in its collapse. Nevertheless, a concentrated ownership structure has been found out to help in case of financial distress, mainly because governments will be more inclined to participate to bailouts when a sound rescue strategy, elaborated with the help of a stable and concentrated ownership structure, is present.

By performing interviews, the authors get an insider’s point of view of these banks during the crisis.

This study aims to investigate how multiple large shareholders individually and interactively influence Middle East and North Africa (MENA) bank stability.

The empirical framework is based on a generalized dynamic two-step system and utilizes the method of moments estimation to analyze a panel dataset of 532 bank-year observations over the 2004–2017 period.

The estimation results show that large shareholders are crucial in explaining the differences in bank stability among MENA banks. Specifically, the first- and second-largest shareholders exacerbate bank instability. However, we found that the third-largest shareholder enhances bank stability. Additionally, the coalition between the two largest shareholders increases the moral hazard problem in MENA banks and significantly decreases stability. Meanwhile, the interaction between the three largest shareholders is associated with a control contestability problem, which impels better bank stability. The results support the dispersion effect of multiple large shareholders in MENA countries.

The role of large shareholders in corporate governance is widely recognized. However, very little is known about the role and the real impact that multiple large shareholders may have on the banking sector. To the best of the authors' knowledge, this work is the first to analyze the relationship between multiple large shareholders and bank stability in the MENA region.

The purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267 African banks from 2006 to 2011.

The authors used the Prais–Winsten ordinary least squares and random effect regression models to explore this relationship to ensure consistency and efficiency in results. The data for this study were collected from Bankscope.

The results of this study show that corporate governance structures such as CEO duality, nonexecutive members and extreme large board size lead to a reduction in both shareholder and stakeholder value maximization. However, audit independence and board size also promote both shareholder and stakeholder value maximization. Although gender diversity promotes profit maximization, it was not significant in any of the models estimated. The results further suggest that the same corporate governance structures promote and detract shareholder and stakeholder value maximization in Africa although the effect of corporate governance structures was weightier on shareholder value maximization confirming the agency theory.

From these findings, bank management must pursue the institution of good corporate governance structures and avoid weak corporate governance structures to promote shareholder and stakeholder value maximization. Also equity holders may have to pay particular attention to corporate governance structures because they benefit the most from the institution of good corporate governance structures.

This study explores and compares how corporate governance structures promote shareholder and stakeholder value maximization separately in African banks. To the best of the authors’ knowledge, this is the first of such studies.

The purpose of this paper is to investigate textual issues and communication patterns of CEOs/chairmen/presidents’ letters to shareholders in the post-2008 financial crisis period. By taking a global perspective, the work specifically explores how 307 banks from 15 countries communicated the issues of financial crisis with shareholders, customers and other stakeholders in their letters to shareholders published in the banks’ annual reports.

By using content analysis and qualitative research, the work specifically analyzes 307 letters to shareholders that constitute 1,028 pages.

Results of the work suggest that textual features and communication patterns of letters to shareholders remain distinct regarding corporate messages that banks delivered to their shareholders. There was little resemblance between financial institutions regarding their communicative patterns. This could be the result of cultural issues, diverse business environments, regulatory standards, discursive information and hidden business practices.

Within our limited data (307 banks), the significance of this paper lies in its timeliness and relevance to the post-2008 financial crisis period and its worldwide business disruptions.

Practitioners need to use the results of this research and should be familiar with the main causes of the crisis that remain controversial and complex.

Global markets and society as a whole were impacted by the severity and longevity of this crisis because of losses, socioeconomic disruptions and business bankruptcies.

Original value of this work falls within the domains of global financial markets and multinational banks.