Impacts of ownership structure on the financial performance of conventional and Islamic banks in the agency theory context
Open Access
- 20 March 2020
- journal article
- Published by Virtus Interpress in Corporate Ownership and Control
- Vol. 17 (3), 46-70
- https://doi.org/10.22495/cocv17i3art4
Abstract
According to the literature review, the analysis results of the impact of ownership structure quality on financial performance within conventional and Islamic financial institutions are contradictory. In our study, we performed a fine differential analysis aimed at resolving this ambiguity. The financial performance and ownership structure variables of conventional and Islamic banks were collected from 16 countries located in three continents: Europe, Asia, and Africa. Two samples were collected that each of them is composed of 63 banks. By using the OLS method, these panel data were compared to the impact of ownership structure on the financial performance between both types of banks in the agency theory framework during the period 2010-2018, giving us 567 bank-year observations in each sub-sample. Results revealed that the ownership structure of conventional banks has had an explained ambiguous impact on its financial performance, whereas that of Islamic banks has a positive effect. Overall, the impacts of the Chief Executive Officer (CEO) shareholding and the board’s chairman shareholding are more significant on the financial performance of conventional banks than those of impacts related to Islamic banks.Keywords
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