The Nonlinear Effects of Ownership Concentration and Board Structure on Bank Performance

Authors

  • Emel Yücel Akdeniz University, Serik Business Faculty, Turkey
  • Gamze Vural Cukurova University, Faculty of Economic and Administrative Sciences, Department of Business Administration, Cukurova University, Turkey

DOI:

https://doi.org/10.2298/PAN190404002V

Keywords:

Performance, Corporate governance, Banking, Tobin's Q

Abstract

This study looks into the relationships between the banks’ ownership structures, the characteristics of their boards, and their performance. A bank's performance varies depending on a series of different factors. In recent years, the evaluation of performance in the context of corporate governance practices has gained importance. This study considers the issue from the perspective of developed nations, looking at the examples of the United States and the United Kingdom. The findings demonstrate that adopting certain corporate governance practices improves a bank's performance levels over previous periods. Having a duality in the board structure and increasing its proportion of nonexecutive board members improve a bank's performance. In contrast, a statistically significant negative relationship was found between bank performance and board size, board members appointed for their specific skills, and the number of board meetings. It was also discovered that there is no linear relationship between the proportion of strictly independent board members on a board of directors and performance. A nonlinear relationship was found between bank ownership concentration and their performance. The discovery of a nonlinear relationship between performance and increasing concentration in a bank's ownership structure and the proportion of strictly independent board members on its board is a sign that there is an optimal level for these variables. 

Key Words: Performance, Corporate governance, Banking, Tobin's Q. 

JEL: L25, G34, G21.

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Published

2022-02-07

How to Cite

Yücel, E., & Vural, G. (2022). The Nonlinear Effects of Ownership Concentration and Board Structure on Bank Performance. Panoeconomicus, 1–16. https://doi.org/10.2298/PAN190404002V

Issue

Section

Original scientific paper

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