Open AccessOwnership concentration and bank profitability
Author(s) -
Peterson K Ozili,
Olayinka Marte Uadiale
Publication year - 2017
Publication title -
future business journal
Language(s) - English
Resource type - Journals
eISSN - 2314-7202
pISSN - 2314-7210
DOI - 10.1016/j.fbj.2017.07.001
Subject(s) - return on assets , profitability index , business , return on equity , net interest margin , equity (law) , shareholder , financial system , context (archaeology) , monetary economics , finance , economics , corporate governance , political science , law , paleontology , biology
We investigate whether ownership concentration influences bank profitability in a developing country context. We focus on bank ownership concentration measured as the amount of direct equity held by a majority shareholder categorised into: high ownership concentration, moderate ownership concentration and disperse ownership. We find that banks with high ownership concentration have higher return on assets, higher net interest margin and higher recurring earning power while banks with dispersed ownership have lower return on assets but have higher return on equity. Also, higher cost efficiency improves the return on assets of widely-held banks and the return on equity of banks with moderate ownership. The findings have implications