The Impact of Ownership Concentration, Commissioners on Bank Risk and Profitability: Evidence from Indonesia

Mamduh Hanafi (), Fitri Santi and Muazaroh ()

Eurasian Economic Review, 2013, vol. 3, issue 2, 183-202

Abstract: We investigate corporate governance and risk in Indonesian banking. More specifically, we investigate whether ownership concentration and commissioners affect bank risk and profitability. Using a sample of 117 Indonesian banks (for ownership concentration analysis), and 28 public banks (for commissioner analysis), we find that ownership concentration and governance by larger numbers of commissioners improves a bank’s profitability and it’s handling of risk. The impact of commissioners on bank risk and profitability takes non-linear forms. We also show that various types of commissioners have different impacts on bank risk and profitability. Our study highlights the importance of corporate governance in the banking industry. Copyright Eurasia Business and Economics Society 2013

Keywords: Bank Risk; Corporate Governance; Ownership Concentration; Commissioners; Indonesia; G21; G3 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (11)

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DOI: 10.14208/eer.2013.03.02.005

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