Does Ownership Structure Matter for Bank Performance in the MENA Region? An Empirical Evidence

Sara Fathi, Mona A. ElBannan

Abstract


The aim of this study is to examine the effect of bank ownership structure on bank performance in Middle East and North Africa (MENA) region using the balanced scorecard (BSC) method. Usinga panel data of 137 commercial banks during the period from 2010 to 2014 across twelve countries in the MENA region, the study highlights the effect of ownership type and concentration on bank performance using the balanced scorecard as a performance measurement technique. The results show that government ownership and foreign ownership have statistically significant positive effect on bank performance measured by BSC index. On the contrary, domestic private ownership and ownership concentration have statistically significant negative effect on bank’s BSC index. Additional analysis on each of the BSC perspective separately reveals that ownership concentration is negatively correlated with the customer and learning and growth factors, while positively correlated with the internal process factor. Government ownership shows statistically significant negative effect on the financial factor and the internal process factor while associated with statistically significant positive effect on the customer factor. Foreign ownership has statistically significant positive effect on the financial and the internal process factor but does not have statistically significant effect on the other two perspectives. Finally, Domestic private ownership reveals a statistically significant negative effect on the learning and growth factor.


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DOI: https://doi.org/10.5296/ajfa.v9i2.11942

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