NDLI: The Effect of Bank Ownership Concentration on Capital Adequacy, Liquidity, and Capital Stability

Content Provider	Springer Nature Link
Author	Chalermchatvichien, Pichaphop Jumreornvong, Seksak Jiraporn, Pornsit Singh, Mahar
Copyright Year	2013
Abstract	We explore the effects of ownership concentration on the risk-taking behavior of banks. Our analysis focuses on East Asian countries because these nations have successfully implemented the Basel standards and demonstrate a high degree of regulatory convergence. For the period from 2005 to 2009, we analyzed the relation between ownership concentration and capital adequacy (Basel II) and find that an increase in ownership concentration by one standard deviation results in an improvement in capital adequacy by 7.64 %. Although Basel III does not go into effect until 2013, we retroactively apply the standards for capital stability on our sample. We find that ownership concentration would have been a significant determinant of capital stability. While at lower levels of ownership concentration, an increase in concentrated ownership would have reduced capital stability; at higher ownership levels, greater ownership concentration would have increased capital stability. We also find that concentrated ownership improves banks’ liquidity. Further, the recent financial crisis does not appear to change the fundamental associations among ownership concentration, capital adequacy, and liquidity.
Starting Page	219
Ending Page	240
Page Count	22
File Format	PDF
ISSN	09208550
Journal	Journal of Financial Services Research
Volume Number	45
Issue Number	2
e-ISSN	15730735
Language	English
Publisher	Springer US
Publisher Date	2013-01-23
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Basel III Bank ownership Capital adequacy Capital stability Financial crisis Finance/Investment/Banking Macroeconomics/Monetary Economics
Content Type	Text
Resource Type	Article
Subject	Finance Accounting Economics and Econometrics

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