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Ownership Structure, Diversification, and Bank Performance: International Evidence

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  • Meng-Fen Hsieh
  • Chien-Chiang Lee
  • Meng-Fen Shen

Abstract

This research utilizes ultimate controlling shareholders to examine whether ultimate ownership structure (bank, industrial company, mutual fund, financial company, and state) and/or income diversification affect bank performance via a total sample of 6,053 commercial banks in six regions (advanced countries, Asia, Latin America, the Middle East and North Africa, Sub-Saharan Africa, and Transit countries). First, taking the group of advanced countries for example, banks can increase their profit under the ownership types of banking institution, mutual fund, and financial company, whereas the interaction of income diversity and ownership is negatively linked with bank performance. Second, the ownership types of banking institution and state help reduce banks’ risk taking, but non-interest income diversity is adversely favorable for risk. Third, banks with mutual funds as controlling shareholders exhibit higher risk, while non-interest income diversity mitigates their risk-taking behavior.

Suggested Citation

  • Meng-Fen Hsieh & Chien-Chiang Lee & Meng-Fen Shen, 2023. "Ownership Structure, Diversification, and Bank Performance: International Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(1), pages 90-112, January.
    • Handle: RePEc:mes:emfitr:v:59:y:2023:i:1:p:90-112
    DOI: 10.1080/1540496X.2022.2093103
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    Cited by:

    1. Zhu, Chen & Lee, Chien-Chiang & Hong, Jin & Shi, Xing, 2023. "Multidimensional cultural distance and self-employment of internal migrants in China," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 58-81.
    2. Lee, Chien-Chiang & Ni, Wenjie & Zhang, Xiaoming, 2023. "FinTech development and commercial bank efficiency in China," Global Finance Journal, Elsevier, vol. 57(C).
    3. Lee, Chien-Chiang & Wang, Fuhao & Chang, Yu-Fang, 2023. "Does green finance promote renewable energy? Evidence from China," Resources Policy, Elsevier, vol. 82(C).

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