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Ownership dispersion and bank performance: Evidence from China

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  • Bian, Wenlong
  • Deng, Chao

Abstract

Using a unique hand-collected dataset of 115 China's commercial banks over the period 2007–2014, this paper investigates the effect of ownership dispersion on bank performance and explores the reason behind the relation. The results indicate that higher ownership dispersion improves return on assets (ROA), return on equity (ROE), and reduces the ratio of nonperforming loans (NPL). Moreover, lower ownership dispersion leads to higher loan concentration, testifying the hypothesis that ownership concentrated banks tend to offer huge loans to large enterprises that usually have connections with large shareholders.

Suggested Citation

  • Bian, Wenlong & Deng, Chao, 2017. "Ownership dispersion and bank performance: Evidence from China," Finance Research Letters, Elsevier, vol. 22(C), pages 49-52.
    • Handle: RePEc:eee:finlet:v:22:y:2017:i:c:p:49-52
    DOI: 10.1016/j.frl.2016.12.030
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    Citations

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    Cited by:

    1. Karlo Kauko, 2021. "The Vanishing Interest Income of Chinese Banks," Asian Economic Papers, MIT Press, vol. 20(3), pages 94-113, Fall.
    2. Karlo Kauko, 2021. "The Vanishing Interest Income of Chinese Banks," Asian Economic Papers, MIT Press, vol. 20(3), pages 94-113, Fall.
    3. Ozili, Peterson K & Uadiale, Olayinka, 2017. "Ownership Concentration and Bank Profitability," MPRA Paper 102571, University Library of Munich, Germany.
    4. repec:zbw:bofitp:2020_002 is not listed on IDEAS
    5. Shailesh Rastogi & Rajani Gupte & R. Meenakshi, 2021. "A Holistic Perspective on Bank Performance Using Regulation, Profitability, and Risk-Taking with a View on Ownership Concentration," JRFM, MDPI, vol. 14(3), pages 1-22, March.
    6. Serhat Yuksel & Hasan Dincer & Senol Emir, 2017. "Comparing the performance of Turkish deposit banks by using DEMATEL, Grey Relational Analysis (GRA) and MOORA approaches," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 3(2), pages 26-47, December.
    7. Qiubin Huang, 2023. "Executive compensation and bank risk in China," Economics and Business Letters, Oviedo University Press, vol. 12(1), pages 62-67.
    8. Huang, qhuang, 2020. "Executive compensation and risk-taking of Chinese banks," MPRA Paper 100377, University Library of Munich, Germany, revised 18 Apr 2020.
    9. Jha, Chandan Kumar & Bhuyan, Rafiqul, 2020. "Do financial reforms promote entrepreneurship?," Finance Research Letters, Elsevier, vol. 34(C).
    10. Zhang, Ailian & Wang, Shuyao & Lien, Donald & Yu, Chia-Feng (Jeffrey), 2023. "Are banks rewarded for financial consumer protection? Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 52(C).
    11. Huang, Qiubin, 2020. "Ownership concentration and bank profitability in China," Economics Letters, Elsevier, vol. 196(C).
    12. Khattak, Mudeer Ahmed & Ali, Mohsin & Azmi, Wajahat & Rizvi, Syed Aun R., 2023. "Digital transformation, diversification and stability: What do we know about banks?," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 122-132.
    13. Chen, Jiamin & Fan, Yaoyao & Zhang, Xuezhi, 2022. "Rookie independent directors and corporate fraud in China," Finance Research Letters, Elsevier, vol. 46(PB).
    14. He, Jinfu & Liu, Yu, 2024. "Digital inclusion finance, social governance and household investment decisions," Finance Research Letters, Elsevier, vol. 62(PB).
    15. Anita Mirchandani & Namrata Gupta, 2018. "Impact of Ownership Structure and Corporate Governance on the Performance: A Case of Selected Banks in UAE," International Journal of Economics and Financial Issues, Econjournals, vol. 8(3), pages 197-206.

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    More about this item

    Keywords

    Ownership dispersion; Bank performance; Large shareholders;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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