How Does Ownership Affect Bank Performance?-The Case Of Indian Commercial Banks (original) (raw)
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Bank ownership and efficiency in India: some fresh evidence
Keio economic studies, 2014
Sub Title Author Bhandari, Anup Kumar Publisher Keio Economic Society, Keio University Publication year 2014 Jtitle Keio economic studies Vol.50, (2014. ) ,p.128 Abstract We have assesed the performance of 68 Indian commercial banks from 1998-99 through 2006-07 following a two-stage method. Data Envelopment Analysis (DEA) methodology is used in the first stage to obtain bank-level technical efficiency (TE) while panel data econometric techniques are used in the socond stage to explain the obtained TE scores in terms of bank-specific factors. Results show that the relationship between size of a bank and its TE is significant positive and publicsector banks outperform domestic private and foreign banks. Non-performing assets and priority sector advances matter for banks' performance. Indian commercial banks are burdened with excess labor force. Some policy implication of our results is also discussed. Notes Genre Journal Article URL http://koara.lib.keio.ac.jp/xoonips/modules/xoon...
IMPACT OF OWNERSHIP STRUCTURE ON BANK PERFORMANCE; EVIDENCE FROM SRI LANKA
Asia Pacific Journal of Advanced Business and Social Studies , 2016
The banking sector in Sri Lanka plays a dominant role in the financial system that facilitates the development of the economy. The participation of private banks has been increased together with a series of financial reforms that have substantially reshaped the banking system in the country. This study investigates the impact of private and state ownership on banks' performance efficiency based on a balanced panel of 11 commercial banks for the period of 2005 to 2014. The study has employed the Minitab and SPSS statistical software to analyze the data calculated by using ten efficiency ratios. The findings revealed that state owned banks have outperformed private banks in return on equity, expenses to income, provisions to total loans, overhead cost and non-interest revenue ratios while private banks have outperformed in interest margin, non-performing loans, return on assets and employment cost ratios. These results signify that, the level of efficiency of state and domestic private banks does not significantly vary across these two ownership types. The mean value of the differences in most of the ratios where domestic private banks have recorded a higher level of efficiency compared to state owned banks is not very significant. However, in the cases where state owned banks have recorded a greater efficiency level, the differences are significant. Therefore it indicates that state banks have outperformed domestic private banks in several aspects.
IAEME PUBLICATION, 2020
A sharp focus is a must on the financial health of the banking institutions, any lapse in management of banks, not only shakes the trust of citizens but also threatens the entire financial system of the country. The present study uses a set of parametric and non-parametric techniques for analyzing and comparing the financial performance of the public sector banks(PSBs) and the private sector banks (PrSBs) in India from 2009- 10 to 2018-19. In India, during the economic boom period, a large number of business projects had been financed or re-financed by the commercial banks especially by the public sector banks, which turned out to be non-viable in the current scenario or have more gestation period than expected, therefore a large part of loan assets of the banking sector has become non-performing, thereby having a significant impact on the profitability and financial health of these institutions. Moreover, the year 2018-19, is marked as a year of the 50th anniversary of bringing the banks under social control, so there is a need to evaluate the financial performance of these banks.
2013
Using Data Envelopment Analysis (DEA) and panel Tobit regression model, this study investigates the determinants of the Indian Commercial Banks Efficiency for the period of 1992–2011.The overall mean efficiency estimates are 47%, 68%, and 71% respectively under Constant Returns to Scale (CRS), Variable Returns to Scale (VRS) and Scale efficiency assumptions for the full sample period. The panel Tobit results indicate that the determinants of the bank efficiency are not common either under bank ownership type or under the Scale assumptions. In the case of full sample under all banks category, under VRS assumption the bank liquidity, profitability, cost, loan concentration variables are key determinants and from macroeconomic variables only GDP growth rate shows some impact. On the other hand under CRS assumption, the liquidity risk, concentration indices and inflation are the key determinants. Finally, under Scale Efficiency assumption, except liquidity and profitability variables, r...
Deregulation, ownership and profit performance of banks: evidence from India
Applied Financial Economics, 2008
This paper studies the effects of deregulation on the banking industry in an emerging economy using profit-based measures of performance. Using panel data of 83 Indian banks belonging to different ownership groups for the period 1986 to 2005, we find that profit efficiency and productivity declined following deregulation. While public sector banks performed better than private banks in the pre-deregulation period, there was no difference in their performances after deregulation. Foreign and new private banks turned out to have the highest levels of profit productivity. Our results are in contrast with the findings of previous studies that have found significant improvements in efficiency and productivity of Indian banks using cost-based measures of performance.
Ownership concentration and bank performance: Evidence from India
Cogent economics & finance, 2022
This paper analyzes the impact of ownership concentration on MENA banks' performance over the period 2004-2011. The sample includes 38 commercial banks belonging to ten countries of the MENA region. We use an econometric method that deals with the endogeneity problems that have arisen in the corporate governance literature. We show that ownership concentration is significant in explaining performance differences between MENA banks. Our analysis shows that bank performance depends on the identity of large shareholder. Banks tend to exhibit higher levels of performance if their largest shareholder is foreign. However, we find a negative relationship between state ownership and bank performance.
Bank Ownership and Performance
SSRN Electronic Journal, 2004
This paper builds a ne w 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 stateowned 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.
Does Ownership Always Matter?—Evidence from the Indian Banking Industry
Journal of Comparative Economics, 1998
Existing empirical evidence on the ownership-performance issue is weighted towards the property rights hypothesis that private enterprises are superior to public enterprises. However, very few studies examine a developing country in which the strong link between the market for corporate control and the efficiency of private enterprises assumed by the property rights hypothesis may not be satisfied. Our study of the Indian banking industry confirms our expectation that, in the absence of wellfunctioning capital markets, there may not be significant differences in the performance of private and public enterprises. Our analysis highlights the importance of creating appropriate institutions prior to pursuing privatization in developing countries.
Does Ownership and Size Influence Bank Efficiency? Evidence from Sri Lankan Banking Sector
2014
This study utilizes Data Envelopment Analysis (DEA) as a non-parametric approach for measuring efficiency to analyze the technical efficiency of the Sri Lankan banking industry from year 2007 to 2011. This study conducted efficiency analysis across the individual, industry, ownership and size factors. The reason behind the selection of the banking industry in Sri Lanka is mainly due to the reasons of competition among the banking sector and the key role they play in the country to protect the stability of the financial system. Hence the efficiency of the banking industry is of paramount importance for the efficiency of the whole economy. Therefore, the objective of the study is to find the efficiency of the banking industry by using DEA as a new approach for measuring efficiency. Results indicate that banks are operating at a higher level of efficiency recording an overall technical efficiency of 83.3 percent. The results also indicate that most of the large banks operate at increas...