Corporate Governance and Bank Performance: A Joint Analysis of the Static, Selection, and Dynamic Effects of Domestic, Foreign, and State Ownership

By Allen N. Berger, George R. G. Clarke, Robert J. Cull, L. Klapper, Gregory F. Udell. 2005

691 citations recorded by the source corpus.

We jointly analyze the static, selection, and dynamic effects of domestic, foreign, and state ownership on bank performance. We argue that it is important to include indicators of all the relevant governance effects in the same model. "Nonrobustness" checks (which purposely exclude some indicators) support this argument. Using data from Argentina in the 1990s, our strongest and most robust results concern state ownership. State-owned banks have poor long-term performance (static effect), those undergoing privatization had particularly poor performance beforehand (selection effect), and these banks dramatically improved following privatization (dynamic effect). However, much of the measured improvement is likely due to placing nonperforming loans into residual entities, leaving "good" privatized banks.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/77e7cb9a2f31abf8edee3564bf61212f75302204

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Citations in the corpus

Promarket Reforms and Firm profitability in Developing Countries (2009, neutral): “Roell [2003] and Berger et al. [2005]).”
Bank Ownership and Efficiency in China: What will Happen in the World's Largest Nation? (2009, positive): “Two studies using Argentine data (prior to the crisis in 2002) find roughly equal efficiency for foreign and private domestic banks, and that both are more efficient on average than state-owned banks (Delfino, 2003; Berger et al., 2005).”
Financial sector liberalization, bank privatization, and efficiency: Evidence from Pakistan (2005, background): “Thus, the first round of reforms had effects in line with expectations and with the findings in other studies (e.g. Berger et al., 2005).”
The Effect of Ownership on the Prudential Behavior of Banks - The Case of China (2009, positive): “One possible reason is that joint-equity banks have better corporate governance.2 Berger et al. (2005) and others explicitly refer to bank ownership and performance as a corporate governance topic.”
Foreign Banks: Trends, Impact and Financial Stability (2012, background): “Generally, lower costs of financial intermediation (measured by margins, spreads, overheads) and lower profitability are documented with greater foreign bank presence (Claessens, Demirguc-Kunt, and Huizinga, 2001 and related studies, e.g., Mian, 2003, Berger, Clarke, Cull, Klapper and Udell, 2005).”
Government ownership and corporate governance: Evidence from the EU. (2012, positive): “In a study of Argentine banks, Berger et al. (2005) associate the governance fostered by state ownership with inefficiencies and poor performance. Fan et al. (2007) show that Chinese government-owned firms which retain politically-connected CEOs perform worse than those with unconnected CEOs. They a”
Ownership Structure and Risk-Taking: Comparative Evidence from Private and State-Controlled Banks in China (2014, background): “, 2005), inferior long-term performance (Berger et al., 2005), greater risk taking (Angkinand and Wihlborg, 2010; Iannotta et al.”
The impact of government ownership on bank risk (2013, positive): “Several papers document that GOBs are less efficient than POBs (La Porta et al., 2002; Barth et al., 2004; Beck et al., 2004; Berger et al., 2004; Berger et al., 2005; Micco et al., 2007, Iannotta et al., 2007).”
State bank transformation in Brazil - choices and consequences (2005, methodology): “38 Similar models are employed by Berger et al. (2005) and Beck et al. (2005). where Performance is one of three variables measuring the performance of bank i in quarter t.”
A more complete conceptual framework for SME finance (2006, background): “1999, Cole, Goldberg, and White 2004, Scott 2004, Berger, Miller, Petersen, Rajan, and Stein 2005 ).”