Bank Ownership and Corporate Performance: Evidence from Egypt

Azzam Islam
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Azzam Islam: American University in Cairo

Review of Middle East Economics and Finance, 2010, vol. 5, issue 3, 91-118

Abstract: Previous studies conclude that bank ownership in developed markets improves firms' performance while in large emerging markets it promotes firm access to bank loans and lowers performance. We examine the effect of bank ownership on firms' performance and their access to bank loans in Egypt. We also look at the factors that affect bank presence in a firm. Our study finds that bank ownership in a firm improves its financial performance and lowers its access to bank loans. We show that banks in Egypt are not likely to cherry pick the best performance firms. Our results find that banks prefer to own equity in firms with better financial performance, lower debt, and higher collateral assets. Additionally, public ownership concentration hurts performance and discourages banks ownership.

Keywords: bank ownership; firm value; Egypt (search for similar items in EconPapers)
Date: 2010
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DOI: 10.2202/1475-3693.1243

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