Ownership Structure and Risk Taking Behaviour - Evidence from the Zimbabwean Banking Sector
Author(s)
Lucky Tuzuka Musikavanhu , Mufaro Andrew Matandare , Noel Zhou ,
Download Full PDF Pages: 41-48 | Views: 941 | Downloads: 302 | DOI: 10.5281/zenodo.3496883
Abstract
The purpose of this paper was to investigate the impact of ownership structure on the risk-taking behavior of banks in Zimbabwe from 2009 to 2011. The banking sector in Zimbabwe is divided into three sectors which are foreign-owned, state owned and locally owned. Banks in each segment were selected using a multistage sampling technique where banks were stratified and followed by convenient sampling technique. The risk taking behavior was measured as a ratio of Non-Performing Loans (NPL) to equity and the data was from financial statements of the sampled banks. An Analysis of Variance (ANOVA) was adopted as an analysis technique and the results indicated that ownership structure strongly influences risk taking behavior with foreign banks taking greater exposure. The paper suggests that policies should be structured in a way that prevents unnecessary risk taking behavior bank managers as this may lead to instability and the collapse of the banking sector
Keywords
Ownership structure, Risk taking behaviour, Banking sector, ANOVA, Zimbabwe
References
i. Agrawal, A., and Knoeber, C. R. (1996). Firm Performance and Mechanisms to Control Agency Problems Between Managers and Shareholders. Journal of Financial and Quantitative Analysis. Vol 31(3). pp382.
ii. Anderson R. C., and Fraser D. R. (2000). Corporate Control, Bank Risk Taking, and the Health of the Banking Industry. Journal of Banking and Finance, Vol. 24. pp.1383–1398.
iii. Angkinand, A. and Wihlborg, C. (2010). Deposit Insurance Coverage, Ownership, and Banks Risk-Taking in Emerging Markets. Journal of International Money and Finance. Vol 29. pp252–274.
iv. Arun, T. G., and Turner, J. D. (2003). Corporate governance of banks in developing economic: Concepts and Issues. IDPM. University of Manchester, Manchester.
v. Besanko, D., and Thakor, A., V. (1993). Relationship Banking, Deposit Insurance and Bank Portfolio, In: Capital Market and Financial Intermediation, Cambridge, UK: Cambridge University Press.
vi. Bhaumik, S. K.., and Piesse, J. (2008). Does Lending behavior of banks in emerging economies vary by ownership? Evidence from the Indian Banking Sector. Economic Systems. Vol 32(2). pp119-216.
vii. Bonin, J. P., Hasan, I., and Wachtel, P. (2005). Bank Performance, Efficiency and Ownership in Transition Countries. Journal of Banking and Finance. Vol29. pp31-53.
viii. Ciancanelli, P., and Gonzalez, J. A. R. (2000). Corporate Governance in Banking: A Conceptual Framework. Social Science Research Network. http://papers.ssrn.com/paper.taf? [Retrieved 0n 15 May 2019].
ix. Demsetz, H., and Lehn, K. (1985). The Structure of Corporate Ownership: Causes and Consequences. Journal of Political Economy. Vol 93. pp1155-1177.
x. Fama, E., and Jensen, M. (1983). Separation of Ownership and Control. Journal of Law and Economics. Vol 26. pp301-325.
xi. Forssbæck, J. (2011). Ownership Structure, Market Discipline, and Bank's Risk Taking Incentives Under Deposit Insurance. Journal of Banking and Finance. Vol 35. pp2666–2678.
xii. Gorton, G., and Rosen, R. (1995). Corporate Control, Portfolio Choice, and the Decline of Banking. Journal of Finance. Vol 50. pp509–527.
xiii. Haw, I. M., Ho, S., Hu, B., and Wu, D. (2010). Concentrated Control, Institutions and Banking Sector: An International Study. Journal of Banking and Finance. Vol34. pp485–497.
xiv. Iannotta, G., Nocera, G., and Sironi, A. (2006). Ownership Structure, Risk and Performance in the European Banking Industry. Journal of Banking and Finance, Vol 31. pp2127-2149
xv. Janek, U. (2004). Effects of Foreign Banks Entry on Bank Performance in the CEE Countries. Tartu University Press.
xvi. Jensen, M., and Meckling, W. (1976). Theory of the Firm: Managerial Behavior and Agency Costs, and Ownership Structure. Journal of Financial Economics. Vol 3. pp305–360.
xvii. Kamau, A.W. (2009). Efficiency in the Banking Sector: An Empirical Investigation of Commercial Banks in Kenya. A Thesis Submitted in Partial Fulfillment of the Requirements of Nairobi University for the Degree of Doctor of Philosophy. Nairobi: University of Nairobi
xviii. Laeven, L. (2004). Bank Governance, Regulation and Risk Taking. Journal of Financial Economics. Vol. 93. pp259–275
xix. Maechler A. M., Mitra, D., and Worrell, D. (2007) .Decomposing Financial Risks and Vulnerabilities in Eastern Europe. IMF Working Paper No. WP/07/248. IMF.
xx. Marco, T., and Fernandez, M., D. (2003). Risk-taking Behavior and Ownership in the Banking Industry: The Spanish Evidence. Journal of Economics and Business. Vol 60. pp332-354.
xxi. Marco T. G., and Fernandez M. D. R. (2008). Risk Taking Behavior and Ownership in the Banking Industry: The Spanish Evidence. Journal of Economics and Business. Vol. XXX. pp1–23.
xxii. Megginson, W. (2005). The Economics of Bank Privatization. Journal of Banking and Finance. Vol 29. pp1931-1980.
xxiii. Sanderson, A., and Le Roux, P. (2016). Determinants of Banking Sector Profitability in Zimbabwe. International Journal of Economics and Financial Issues. Vol 6(3). pp845-854.
xxiv. Saunders, A., Strock, E., and Travlos, N. (1990). Ownership Structure, Deregulation, and Bank Risk Raking. Journal of Finance. Vol. 45. pp643–654
xxv. Shliefer, A., and Vishny R.W. (1986) .Corruption. Quarterly Journal of Economics. Vol 107. pp599-617.
xxvi. Shleifer, A., and Vishny, R. W. (1997). A Survey of Corporate Governance. Journal of Finance. Vol 52. pp737-783
xxvii. Shleifer, A., and Wolfenzon, D. (2002). Investor Protection and Equity Markets. Journal of Financial Economics. Vol 66(1). pp3-27.
xxviii. Smith, B., and Amoako, A. (1999). Management Succession and Financial Performance of Family Controlled Firms. Journal of Corporate Finance. Vol 5. pp341-368.
xxix. Sullivan, R. J., and Spong, K. R., (2007). Manager Wealth Concentration, Ownership Structure, and Risk in Commercial Banks. Journal of Financial Intermediation. Vol 16. pp229-248.
Cite this Article: