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The impact of bank ownership concentration on impaired loans and capital adequacy

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  • Shehzad, Choudhry Tanveer
  • de Haan, Jakob
  • Scholtens, Bert

Abstract

This paper examines the impact of bank ownership concentration on two indicators of bank riskiness, namely banks' non-performing loans and capital adequacy. Using balance sheet information for around 500 commercial banks from more than 50 countries averaged over 2005-2007, we find that concentrated ownership (proxied by different levels of shareholding) significantly reduces a bank's non-performing loans ratio, conditional on supervisory control and shareholders protection rights. Furthermore, ownership concentration affects the capital adequacy ratio positively conditional on shareholder protection. At low levels of shareholder protection rights and supervisory control, ownership concentration reduces bank riskiness.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 34 (2010)
Issue (Month): 2 (February)
Pages: 399-408

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Handle: RePEc:eee:jbfina:v:34:y:2010:i:2:p:399-408

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Web page: http://www.elsevier.com/locate/jbf

Related research

Keywords: Ownership concentration Bank riskiness Capital adequacy Impaired loans;

References

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