Ownership and efficiency in Malaysian banking
Changes in the ownership structure have been an important feature of the evolution of the Malaysian banking sector. In 1986, the Banking Act of 1973 was amended to limit equity ownership by individual companies in a bank to 20 percent, and by a family-owned company or an individual person to 10 perc...
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2003
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my.uum.repo.15912010-11-28T06:45:15Z http://repo.uum.edu.my/1591/ Ownership and efficiency in Malaysian banking Abd Karim, Mohd Zaini HG Finance Changes in the ownership structure have been an important feature of the evolution of the Malaysian banking sector. In 1986, the Banking Act of 1973 was amended to limit equity ownership by individual companies in a bank to 20 percent, and by a family-owned company or an individual person to 10 percent. This paper analyzes whether ownership structure has any effect on bank efficiency in Malaysia. Cost efficiency is estimated using the Stochastic cost frontier approach. Tobit regression analysis is then employed to determine the effect of ownership variables on bank efficiency. The results indicate that first, state-owned banks and local banks are less efficient than privately owned banks and foreign banks, respectively. Second, we find a positive correlation between ownership concentration and firm’s performance suggesting that large investors, to some extent, have the incentive as well as the power to monitor and control the behavior of management, and thus assume a significant role in corporate governance. Open Journal System 2003-12 Article PeerReviewed Abd Karim, Mohd Zaini (2003) Ownership and efficiency in Malaysian banking. Philippine Review of Economics, 40 (2). pp. 91-101. ISSN 1655-1516 http://pre.econ.upd.edu.ph/index.php/pre/article/view/23 |
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HG Finance Abd Karim, Mohd Zaini Ownership and efficiency in Malaysian banking |
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Changes in the ownership structure have been an important feature of the evolution of the Malaysian banking sector. In 1986, the Banking Act of 1973 was amended to limit equity ownership by individual companies in a bank to 20 percent, and by a family-owned company or an individual person to 10 percent. This paper analyzes whether ownership structure has any effect on bank efficiency in Malaysia. Cost efficiency is estimated using the Stochastic cost frontier approach. Tobit regression analysis is then employed to determine the effect of ownership variables on bank efficiency. The results indicate that first, state-owned banks and local banks are less efficient than privately owned banks and foreign banks, respectively. Second, we find a positive correlation between ownership concentration and firm’s performance suggesting that large investors, to some extent, have the incentive as well as the power to monitor and control the behavior of management, and thus assume a significant role in corporate governance. |
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Article |
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Abd Karim, Mohd Zaini |
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Abd Karim, Mohd Zaini |
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Abd Karim, Mohd Zaini |
title |
Ownership and efficiency in Malaysian banking |
title_short |
Ownership and efficiency in Malaysian banking |
title_full |
Ownership and efficiency in Malaysian banking |
title_fullStr |
Ownership and efficiency in Malaysian banking |
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Ownership and efficiency in Malaysian banking |
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ownership and efficiency in malaysian banking |
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Open Journal System |
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2003 |
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http://repo.uum.edu.my/1591/ http://pre.econ.upd.edu.ph/index.php/pre/article/view/23 |
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1644278016041287680 |
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13.15806 |