Ownership Structure, Supervisory Regulation and the Diversification Effects on Bank Performance Hsiangping Tsai Hsiangping Tsai Department of Finance, Yuan Ze University Yuanchen Chang Yuanchen Chang Department of Finance, National Chengchi University Kuanyu Lai Kuanyu Lai Department of Finance, National Chengchi University
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Ownership Structure, Supervisory Regulation and the Diversification Effects on Bank Performance Hsiangping Tsai Department of Finance, Yuan Ze University.
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Ownership Structure, Supervisory Regulation and the Diversification Effects on Bank Performance
Ownership Structure, Supervisory Regulation and the Diversification Effects on Bank Performance
Hsiangping TsaiHsiangping TsaiDepartment of Finance, Yuan Ze University
Yuanchen ChangYuanchen ChangDepartment of Finance, National Chengchi University
Kuanyu LaiKuanyu LaiDepartment of Finance, National Chengchi University
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Effects of diversification on bank performance
• Possible benefits¤ Risk reduction, information sharing, internal
capital market Ross(1989); Saunders and Walter(1994); Houston et al.
Baseline results: bank diversification performance
Panel 1: ExROA (ROA adjusted for income diversity) Model 1 Model 2 Model 3
Coeff S.E. Coeff S.E. Coeff S.E. Intercept 1.718a 0.081 1.897a 0.082 -0.750 a 0.094 Income diversity -0.529a 0.020 -1.415a 0.071 -0.554 a 0.067 Income diversity 2 0.902a 0.069 0.334 a 0.064 Total Equity to Total Asset 5.375 a 0.051 Net Interest Revenue to Total Operating Income 0.663 a 0.026 Ln (Asset) 0.048 a 0.003 Listed bank 0.108 a 0.015 Adj R-sq 0.122 0.125 0.249 # obs 67,108 67,108 67,108
Baseline results: bank diversification performance
Panel 2: ExROA (ROA adjusted for asset diversity) Model 1 Model 2 Model 3
Coeff S.E. Coeff S.E. Coeff S.E. Intercept 1.528a 0.082 1.671a 0.084 -0.733 a 0.092 Asset diversity -0.256a 0.018 -0.840a 0.071 -0.372 a 0.066 Asset diversity 2 0.549a 0.064 0.281 a 0.060 Total Equity to Total Asset 5.641 a 0.051 Total Customer Loans to Total Earnings Assets 0.360 a 0.021 Ln (Asset) 0.053 a 0.003 Listed bank 0.095 a 0.015 Adj R-sq 0.133 0.134 0.268 # obs 67,108 67,108 67,108
Effects of dominant owner on diversification performance
Panel 1: ExROA (ROA adjusted for income diversity) Model 1 Model 2 Model 3
Coeff S.E. Coeff S.E. Coeff S.E. Intercept -0.729 a 0.094 -0.655 a 0.094 -0.522 c 0.273 Income diversity -0.562 a 0.067 -0.569 a 0.067 -0.746 a 0.167 Income diversity 2 0.319 a 0.064 0.326 a 0.064 0.457 a 0.154 LS * Income diversity 0.093 a 0.020 LS_G * Income diversity -0.196 a 0.057 LS_F * Income diversity 0.014 0.026 LS_D * Income diversity 0.243 a 0.028 0.271 a 0.045 Total Equity to Total Asset 5.372 a 0.051 5.381 a 0.051 5.036 a 0.121 Net Interest Revenue to Total Operating Income 0.664 a 0.026 0.666 a 0.026 0.765 a 0.053 Ln (Asset) 0.045 a 0.003 0.045 a 0.003 0.040 a 0.008 Listed bank 0.112 a 0.015 0.119 a 0.015 0.032 0.040 Adj R-Sq 0.249 0.250 0.246 # obs 67,108 67,108 12,749
Effects of dominant owner on diversification performance
Panel 2: ExROA (ROA adjusted for asset diversity) Model 1 Model 2 Model 3
Coeff S.E. Coeff S.E. Coeff S.E. Intercept -0.700 a 0.092 -0.656 a 0.093 -0.470 c 0.270 Asset diversity -0.398 a 0.066 -0.407 a 0.066 -0.423 a 0.148 Asset diversity 2 0.287 a 0.060 0.295 a 0.060 0.145 0.141 LS * Asset diversity 0.084 a 0.019 LS_G * Asset diversity -0.106 b 0.050 LS_F * Asset diversity 0.069 a 0.025 LS_D * Asset diversity 0.146 a 0.027 0.104 b 0.043 Total Equity to Total Asset 5.632 a 0.051 5.633 a 0.051 5.204 a 0.121 Total Customer Loans to Total Earnings Assets 0.358 a 0.021 0.356 a 0.021 0.520 a 0.046 Ln (Asset) 0.050 a 0.003 0.051 a 0.003 0.052 a 0.008 Listed bank 0.098 a 0.015 0.102 a 0.015 0.010 0.040 Adj R-Sq 0.269 0.268 0.235 # obs 67,108 67,108 12,749