The impact of bank ownership concentration on impaired loans and capital adequacy |
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| Authors: | Choudhry Tanveer Shehzad Jakob de Haan Bert Scholtens |
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| Affiliation: | 1. University of Groningen, Department of Finance, Faculty of Economics and Business, P.O. Box 800, 9700 AV Groningen, The Netherlands;2. University of Groningen, Department of International Economics and Business, Faculty of Economics and Business, P.O. Box 800, 970 AV Groningen, The Netherlands;3. CESifo, Poschingerstr. 5, 81679 Munich, Germany |
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| Abstract: | This paper examines the impact of bank ownership concentration on two indicators of bank riskiness, namely banks’ non-performing loans and capital adequacy. Using balance sheet information for around 500 commercial banks from more than 50 countries averaged over 2005–2007, we find that concentrated ownership (proxied by different levels of shareholding) significantly reduces a bank’s non-performing loans ratio, conditional on supervisory control and shareholders protection rights. Furthermore, ownership concentration affects the capital adequacy ratio positively conditional on shareholder protection. At low levels of shareholder protection rights and supervisory control, ownership concentration reduces bank riskiness. |
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| Keywords: | E44 G21 G30 G33 |
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