Bank Ownership and Performance

By A. Micco, U. Panizza, M. Yañez. 2004

371 citations recorded by the source corpus.

This paper builds a new dataset on bank ownership and bank performance covering approximately 50,000 observations for 119 countries over the 1995-2002 period. The paper then uses the dataset to reassess the relationship between bank ownership and bank performance, providing separated estimations for developing and industrial countries. It is found that, while ownership is strongly correlated with performance in developing countries, that ownership is not correlated with performance in industrial countries. In particular, the paper suggests that state-owned banks operating in developing countries tend to have lower profitability and higher costs than their private counterparts, and that the opposite is true for foreign-owned banks (which tend to be characterized by higher profitability and lower costs). We also find that, in developing countries, the entry of foreign banks plays a useful role by making domestic banks more efficient in terms of overhead cost and spreads, although we do not find any effect on profitability of domestic banks.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/aa299445d8c474f54bfe1ac66aedb412a4cb1272

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Finance

Citations in the corpus

Banking supervision and nonperforming loans: a cross-country analysis (2009, background): “This result corroborates those of Micco et al. (2004) who conclude that NPLs tend to be higher for state-owned banks on a panel of emerging countries.”
Ownership, bank size, capitalization and bank performance: Evidence from India (2020, neutral): “…et al., 2018; Athanasoglou et al., 2006; Bougatef, 2017; Demirguc-Kunt & Huizinga, 1999; Dietrich & Wanzenried, 2014; Goddard et al., 2004b; Micco et al., 2007; Molyneux & Thornton, 1992; Pasiouras & Kosmidou, 2007; Perera & Wickramanayake, 2016; Robin et al., 2018; Staikouras & Wood,…”
Bank Specific, Business and Institutional Environment Determinants of Banks Nonperforming Loans: Evidence from MENA Countries (2010, methodology): “We present in Table (3) the results related to the baseline model which examines the effects of bank specific variables on NPL. Tables (4) and (5) report results after controlling for business and institutional environment.”
Ownership Structure and Risk in Publicly Held and Privately Owned Banks (2011, neutral): “et al., 2001; Bonin et al, 2005; Micco et al., 2007 ).”
Foreign Banks in Poor Countries: Theory and Evidence (2008, positive): “Based on cross-country studies, foreign-owned banks have been found to have lower operating costs and higher profitability than private domestic banks, while state-owned banks have higher costs and lower profitability than the other two categories (Mian, 2003; Micco, Panizza, and Yañez, 2004).”