Impact of bank’s ownership structure on risk and efficiency: Evidence from Bangladesh

Syed Moudud-Ul-Huq, Rubaida Akter, Tanmay Biswas and Reshma Pervin Lima
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Syed Moudud-Ul-Huq: Department of Business Administration, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh
Rubaida Akter: Department of Business Administration, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh
Tanmay Biswas: Department of Business Administration, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh
Reshma Pervin Lima: Department of Business Administration, Mawlana Bhashani Science and Technology University, Tangail-1902, Bangladesh

International Journal of Financial Engineering (IJFE), 2020, vol. 07, issue 03, 1-18

Abstract: This study is investigated the impact of ownership structure on bank’s risk and efficiency in Bangladesh. We have used Z-Score as risk-taking variable. As ownership structure is the main variable here, we have taken managerial ownership, institutional ownership, and general public ownership as proxies for ownership structure. Here, another important main variable efficiency has been used as a stability. For our study, we have selected 32 banks randomly. Data have been collected from annual reports of these banks. The time frame of the data is 2000–2014. The study results suggested that using Z-score as proxy for risk taking and the proxy of managerial ownership has negative association and the institutional ownership has significant positive effect on Z-score of commercial banks in Bangladesh. The proxies we have used for ownership structure i.e., managerial ownership and general public ownership have significant negative association on efficiency. On the other hand, institutional ownership has positive effect on the overall efficiency of the banks in Bangladesh. At the end of the study, we have also suggested some policy implications regarding ownership structure, risk, and efficiency of the banks.

Keywords: Ownership structure; bank risk; efficiency; two-stage least squares (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S2424786320500334

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