Impact of ownership structure on bank performance: Evidence from an emerging economy

Abstract

This article analyses the impact of ownership structure on the performance of Vietnamese commercial banks. The research data comprises 27 commercial banks over the period from 2012 to 2021. Pooled Ordinary Least Squares (OLS), Fixed Effects Model (FEM), Random Effects Model (REM), and Feasible Generalised Least Squares (FGLS) panel data regression models were employed for the analysis. The variables representing the ownership structure of commercial banks in Vietnam include private ownership and foreign ownership. The private ownership variable is measured by the ratio of shares owned by private investors to total shares; the foreign ownership variable is measured by the ratio of shares owned by foreign investors to total shares. The dependent variables representing bank performance are return on assets (ROA) and return on equity (ROE). After employing the FGLS estimation method to address potential model deficiencies, the results indicate that both private and foreign ownership negatively impact bank performance. Control variables such as bank size, bank capital, inflation, and GDP growth also affect bank performance in Vietnam.