International Journal of Islamic and Middle Eastern Finance and

Management
Ownership structure and financial performance in Islamic banks: Does bank ownership
matter?
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

Sarra Ben Slama Zouari, Neila Boulila Taktak,

Article information:
To cite this document:
Sarra Ben Slama Zouari, Neila Boulila Taktak, (2014) "Ownership structure and financial performance in
Islamic banks: Does bank ownership matter?", International Journal of Islamic and Middle Eastern Finance
and Management, Vol. 7 Issue: 2, pp.146-160, https://doi.org/10.1108/IMEFM-01-2013-0002
Permanent link to this document:
https://doi.org/10.1108/IMEFM-01-2013-0002
Downloaded on: 24 September 2018, At: 02:44 (PT)
References: this document contains references to 33 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 3109 times since 2014*
Users who downloaded this article also downloaded:
(2015),"Bank performance and board of directors attributes by Islamic banks", International Journal
of Islamic and Middle Eastern Finance and Management, Vol. 8 Iss 3 pp. 291-309 <a href="https://
doi.org/10.1108/IMEFM-10-2013-0111">https://doi.org/10.1108/IMEFM-10-2013-0111</a>
(2014),"The relationship between capital structure and performance of Islamic banks", Journal of
Islamic Accounting and Business Research, Vol. 5 Iss 2 pp. 158-181 <a href="https://doi.org/10.1108/
JIABR-04-2012-0024">https://doi.org/10.1108/JIABR-04-2012-0024</a>

Access to this document was granted through an Emerald subscription provided by emerald-srm:604937 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for
Authors service information about how to choose which publication to write for and submission guidelines
are available for all. Please visit www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company
manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as
providing an extensive range of online products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee
on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.

*Related content and download information correct at time of download.

 The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1753-8394.htm

IMEFM
7,2
Ownership structure and
financial performance in Islamic
banks
146 Does bank ownership matter?
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

Sarra Ben Slama Zouari

Department of Accounting and Finance, ISCAE University Tunis,
Tunis, Tunisia, and
Neila Boulila Taktak
Department of Accounting and Finance, ISGG University of Gabes,
Gabes, Tunisia

Abstract
Purpose – This study aims to investigate empirically the relationship between ownership structure
(concentration and mix) and Islamic bank performance, with a special attention to the identity of the
block investor (foreign, family, institutional and state).
Design/methodology/approach – Regression analyses are conducted to test the impact of the
identity of the first shareholders and the degree of concentration on Islamic bank performance, using a
panel data sample of 53 Islamic banks scattered over ⬎ 15 countries from 2005 to 2009.
Findings – Results suggest that ownership is concentrated at 49 per cent, and for 41 banks from the full
sample, the ultimate owner is institutional. State investors come in second place, followed by family ultimate
shareholders. Using return on assets and return on equity as performance measures, empirical evidence
highlights the absence of correlation between ownership concentration and Islamic bank performance. It also
reveals that the combined effort of family and state investors is beneficial to bank performance. Results also
indicate that banks with institutional and foreign shareholders do not perform better. Empirical findings
suggest that the financial crisis impacts negatively Islamic bank performance.
Research limitations/implications – The use of dummy variables to measure the nature of the
largest owner represents the main limitation of this study. This is due to the lack of information, as the
percentage of the largest capital held referring to owner category was available only for some banks.
Practical implications – This research has given a brighter insight into corporate governance and
bank performance in selected Islamic banking institutions. Findings provided useful information to
bank managers, investors and policy makers. Financial performance can be improved by identifying
practices associated with ownership structure. So, it will have policy implications for Islamic banks as to
how to improve their performance. Finally, different types of bank ownership have had different concerns
about implementing corporate governance practices among Islamic banks.

JEL classification – G21, G32, G34

International Journal of Islamic and
Middle Eastern Finance and
Management
Vol. 7 No. 2, 2014
pp. 146-160
Emerald Group Publishing Limited
1753-8394
DOI 10.1108/IMEFM-01-2013-0002
© First published in 2012 by the Economic Research Forum (ERF) Working Paper Series Number
713
An earlier version of this article was previously published by the Economic Research Forum
(ERF) Working Paper Series Number 713. We would like to thank the reviewers, the discussant
and participants at the 18th Annual Conference of the ERF held in Cairo, March 2012, who have
shared their ideas and knowledge with us generously.
 Originality/value – This work is the first of its kind for Islamic banks. It extends previous research by Ownership
examining whether ownership structure (concentration and mix) affects performance. It also fills the gap in
the literature by providing empirical evidence on a large sample involving data from 15 countries. Finally, structure and
manual data collection on ownership structure constitutes a large part of the research for this paper. financial
Keywords Financial performance, Islamic banks, Ownership concentration, Ownership mix, performance
Ownership structure
Paper type Research paper
147
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

1. Introduction and motivations

Abundant literature is exploring the impact of ownership structure on performance of
conventional banks, while less research has investigated this issue for Islamic banks.
Financial and management researchers have paid little attention to Islamic banks
despite their growing role and their importance in promoting economic growth and
developing financial markets. It is only since 2009 that researchers started to study the
impact of some governance aspects on Islamic bank performance. Abbas et al. (2009)
investigate the impact of ultimate ownership structure on performance of 31 Malaysian
Islamic financial institutions (2000-2006). They find that the ultimate owner is the
government, followed by foreign, family and institutional ownership. They prove that
government, family and institutional ownerships influence significantly and positively
the return on asset (ROA), but they have no impact on non-performing loans.
The major motivations of this research paper are twofold. First, it aims to fill a gap in
the banking literature by focusing on the Islamic banking sector. While there is a large
body of practitioner literature on Islamic banking, there are few academic papers.
Especially, empirical works studying the impact of ownership structure on bank
performance are still in their infancy. A recent study published by the IMF (2010) shows that
the ownership structure of the Gulf Cooperation Council (GCC) banking sector is different
from the conventional banking sector. The Islamic banking sector is largely domestically
owned. This reflects entry barriers and licensing restrictions for foreign banks, and local
banks still have well-established franchises in domestic business. Except for Bahrain, all
GCC countries have limits on foreign ownership. Therefore, the cross-border presence of
GCC banks and other foreign banks is limited and is mostly in the form of branches.
Second, because Islamic banks differ from conventional banks in their performance
structures, it is important for these banks to be studied independently. In fact, they operate
under Shariah rules, according to profit-and loss-sharing principle, and the financial and
monetary performances have varied from country to country. This paper will, therefore,
shed some light on the impact of ownership structure in determining the variability of
Islamic bank performance and contributes to the emerging literature on this topic.
The aim of this study is to gain an understanding of a significant determinant mostly
associated with Islamic bank performance, namely, ownership. Ownership nature
(foreign, family, institutional or state) is a crucial element for a healthy banking system.
Especially, changes in ownership structure without a supporting regulatory and
supervisory body in place are likely to lead to a banking crisis (Boubakri et al., 2005).
This paper addresses the following two issues:
(1) does ownership concentration affect Islamic bank performance?; and
(2) what is the role of the nature of block identity (i.e. family, state, family and
foreign investor) on performance?
 IMEFM It uses panel regressions to investigate the impact of the nature of ownership structure
on the performance of 53 Islamic banks in 15 countries during 2005-2009. Findings allow
7,2 us to examine the identity of the first shareholders and the degree of concentration and
their impact on Islamic bank performance. To our best knowledge, this is the first study
that considers two dimensions of ownership structure (mix and concentration). Results
highlight a field in the Islamic banking sector rarely investigated despite its tremendous
148 importance in the development process. It also reveals that the combined effort of
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

government and family investors is beneficial to bank performance.

The paper is organized as follows. Section 2 discusses the literature related to the
relationship between ownership structure and performance. Section 3 introduces data
and variables used. Section 4 is devoted to the discussion of the empirical findings.
Section 5 concludes the research by reporting the main findings, limitations and avenues
for future research.

2. A brief literature review

According to Shleifer and Vishny (1994), ownership structure influences a firm’s
performance. Literature agrees on two attributes of the ownership structure:
(1) ownership concentration, which refers to the share of the largest owner; and
(2) ownership mix, related to the major owner identity.

2.1 Ownership concentration and performance

Numerous studies have argued that the relationship between ownership concentration
and firm performance is complex, and empirical studies reported mixed results
(Demsetz, 1983; Demsetz and Lehn, 1985; Shleifer and Vishny, 1986). Because these
results are conflicting and ambiguous, it becomes interesting to study the nature of this
relation for Islamic banks, which present differences in terms of political, economic and
institutional conditions.
The current literature provides three main hypotheses which links ownership
structure to performance:
(1) convergence of interest hypothesis;
(2) entrenchment hypothesis; and
(3) neutrality hypothesis.

Convergence of interest hypothesis states that concentrated ownership may improve

performance by decreasing monitoring costs and providing better control of
management. Large owners have the incentives and the power to monitor managers
(Jensen and Meckling, 1976; Shleifer and Vishny, 1986). Consequently, concentrated
ownership minimizes the principal agent agency problem that arises from the
separation between ownership and control and, therefore, predicts a positive
relationship between ownership concentration and firm performance (Claessens et al.,
2002; Zeitun and Tian, 2007).
Entrenchment hypothesis argues instead that presence of large controlling
shareholders can lead to expropriation behavior. La Porta et al. (1999) suggest that a
higher level of ownership concentration will enhance the incentive and power of owners
to expropriate minority shareholder wealth. Since, the ultimate owner can abuse their
power of control to extract private benefits and expropriate minority stakeholders.
 Moreover, this expropriation behavior, in the case of a high ownership concentration, Ownership
may limit the firm’s ability to raise funds through borrowing or new share offerings.
Consequently, the share participation for insider controllers may decrease firm
structure and
performance (Leech and Leahy, 1991). financial
According to neutrality hypothesis, maximizing the firm value is determined by performance
external factors such as the characteristics of its environment, its market and its own
operating conditions. So, separation exists between ownership and decision, and there is 149
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

no reason to think that a concentrated firm is more efficient than a firm having dispersed
capital (Demsetz, 1983; Demsetz and Lehn, 1985; Holderness and Sheehan, 1988).

2.2 Ownership mix and performance

According to Thomsen and Pedersen (2000), the effects of ownership concentration vary
from different types of shareholders, in particular based on state, foreign or family and
institutional origin.
La Porta et al. (2002) advance two points of view to justify the state ownership:
(1) the development view on one hand; and
(2) the political view on the other hand.

The first one states that government presence is necessary to finance projects that are
socially desirable and to jumpstart both financial and economic development in
countries suffering from underdevelopment of their institutions. The second suggests
that, in countries with underdeveloped financial systems, government’s ownership
provides employment and benefit in return for votes. The majority of research indicates
that a state-owned bank has a negative impact in terms of productivity and efficiency
and is also associated with weak competence and higher corruption (Shleifer and
Vishny, 1997; Shleifer, 1998). Contrariwise, few studies have found that government
ownership is positively related to firm performance (Ang and Ding, 2006).
It is stipulated that firms with foreign ownership operating in developed countries
performed better than their domestically owned counterparts. However, in developing
countries, findings are mixed. As noted by Stulz (1999), firms with high foreign
ownership may tend to perform effective monitoring; offer a superior access to technical,
managerial talent and financial resources; and thus contribute to increase a firm’s
performance (Sarkar and Sarkar, 2000; Sufian, 2006; Kim et al., 2012). Alternatively,
Elyasiani and Mehdian (1997) found that foreign banks are less profit efficient as a
consequence of their reliance on purchased funds.
Studies have shown that family-owned firms are more likely to engage in managerial
entrenchment at the expense of the company, leading to the decline in profitability
(Holderness and Sheehan, 1988). Alternatively, family ownership is expected to be
positively related to a firm’s performance, as it helps to reduce agency costs. In this case,
a manager’s interest is naturally aligned with those of the owners (Anderson and Reeb,
2003).
Shleifer and Vishny (1986) reported that institutional shareholders have greater
incentive to monitor managers. They have the ability and the resources to discipline
managers and to keep them away from opportunistic behaviors. Smith (1996) supports
a positive relationship between institutional ownership and performance. However,
Agrawal and Knoeber (1996) find no significant relationship.
 IMEFM 3. Data and variables
3.1 Sample selection
7,2 The data used in this study are cross-country bank-level data, compiled from income
statements and balance sheets of 53 Islamic banks in 15 countries for each year during
2005-2009. The primary source of financial data is the “Islamic Banks and Financial
Institution Information” database (www.ibisonline.net), a division of the Islamic
150 Research and Training Institute. This database offers a presentation of banking
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

financial statements in accordance with the requirements of Islamic finance, contrary to

that provided by Bankscope, which has the disadvantage to present information
according to conventional bank rules. Various commonly used accounting-based
performance measures for banks and other financial variables are taken from published
balance sheets and income statements. However, data on ownership structure (mix and
concentration) were collected manually from annual reports and by consulting the
mubasher.info Web site. The missing data were completed from the Bankscope
database. Collecting data on ownership constitutes a fundamental contribution of this
research. Finally, information on macroeconomic variables was collected from the
World Bank database. After removing missing and incomplete data, the final study
sample included 53 Islamic banks from 15 countries, given in Table I.

3.2 Variables
Financial performances represent our dependent variables. The explanatory variables
are composed from variables of interest related to ownership structure (concentration
and mix) and control variables (bank characteristics and macroeconomic factors).
3.2.1 Performance variables. Using pooled data for 53 Islamic banks, we focus on two
useful financial bank performance indicators: ROA and return on equity (ROE)
(Claessens et al., 2000; Kabir Hassan, 2005). Non-performing loans were not used as a
proxy for bank quality assets due to lack of information.
3.2.2 Bank ownership variables. We have followed Demsetz and Lehn (1985) in
measuring concentration, with respect to owner group, usually as the total equity share

Country Number of banks

Bahrain 13
Republic of Kuwait 8
Malaysia 7
United Arab Emirates 5
Saudi Arabia 3
United kingdom 3
Islamic Republic of Pakistan 3
Egypt 2
Yemen 2
Qatar 2
Indonesia 1
Swiss 1
Sudan 1
Table I. Tunisia 1
Distribution of banks by Turkey 1
country 53
 held by shareholders. Our first measure of concentration is the percentage of shares held Ownership
by the largest shareholders (C1). Second, we calculate the percentage of the first three
largest shareholders (C3) and finally the percentage of the first five largest shareholders
structure and
(C5). We have tried to calculate the percentage of the first ten largest shareholders, but financial
we were prevented by the lack of data. Correlation matrix (Table II) reveals a serious and performance
severe problem of multicollinearity between C1, C3 and C5 (⬎ 70 per cent); that is why
these variables are introduced in the model one by one. Therefore, we will have three 151
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

models (M1, M2 and M3) for each measure of financial performance (ROA and ROE).
Besides the ownership concentration, the identity of large owners has importance
implications for performance as suggested by Thomsen and Pederson (2000). To
categorize the controlling owners, we have looked at the largest fraction of shares owned
by referring to the owner category it represents. We have used four dummy variables.
GOV is the first dummy variable which takes the value of 1 if the largest shareholder is
the government and 0 otherwise. INST is the second dummy variable which takes the
value of 1 if the largest shareholder is a financial institution investor and 0 otherwise.
FAM is the third dummy variable which takes the value of 1 if the largest shareholder is
a family investor and 0 otherwise. Finally, FORG is the fourth dummy variable that
takes the value of 1 if there is presence of foreign shareholders in the capital, without
being majority and 0 otherwise. We choose to introduce these variables in the model one
by one to capture their effects separately. The use of dummy variables to measure the
nature of the largest owner is due to the lack of information, as the percentage of the
largest capital held referring to owner category was disposable only for some banks.
The methodology followed in this paper is panel regression. The model was
estimated using the technique of generalized least squares estimation, which serves to

C1 C3 C5 INST GOV FAM FORG CAR LEV SIZE AGE GDP INFL CRISIS

C1 1.00
C3 0.86 1.00
C5 0.76 0.98 1.00
INST 0.17 0.09 0.06 1.00
GOV 0.04 0.07 0.05 ⫺0.69 1.00
FAM ⫺0.29 ⫺0.19 ⫺0.13 ⫺0.62 ⫺0.13 1.00
FORG ⫺0.45 ⫺0.32 ⫺0.21 ⫺0.08 ⫺0.04 0.15 1.00
CAR ⫺0.21 ⫺0.29 ⫺0.29 0.12 ⫺0.05 ⫺0.11 0.16 1.00
LEV 0.02 ⫺0.02 ⫺0.02 ⫺0.11 0.20 ⫺0.07 ⫺0.23 0.25 1.00
SIZE 0.03 0.09 0.09 ⫺0.13 0.02 0.15 ⫺0.18 ⫺0.48 ⫺0.26 1.00
AGE ⫺0.02 0.08 0.09 ⫺0.08 0.07 0.04 ⫺0.09 ⫺0.28 ⫺0.01 0.26 1.00
GDP ⫺0.03 0.00 ⫺0.01 0.05 0.02 ⫺0.09 0.09 0.07 ⫺0.11 0.02 0.04 1.00
INFL ⫺0.13 ⫺0.04 0.00 ⫺0.03 0.08 ⫺0.05 0.13 ⫺0.18 0.03 0.42 0.06 0.22 1.00
CRISIS 0.00 ⫺0.01 ⫺0.02 ⫺0.01 0.00 0.00 0.00 ⫺0.15 0.06 0.15 ⫺0.04 ⫺0.40 0.21 1.00

Notes: Where C1: the percentage of shares held by the largest shareholders; C3: the percentage of the first three largest
shareholders; C5: the percentage of the first five largest shareholders; FORG: dummy variable that takes 1 if there is presence
of foreign shareholders and 0 otherwise; INST: dummy variable which takes 1 if for the largest owner is institutional and 0
otherwise; GOV: dummy variable which takes 1 if for the largest owner is the government and 0 otherwise; FAM: dummy
variable which takes 1if for the largest owner is a family and 0 otherwise; LEV: total debts scaled by total asset; CAR: capital
adequacy ratio; SIZE: logarithm of total assets; AGE: the logarithm of age of bank from the firm’s incorporation date; GDP:
Table II.
gross domestic product growth; INFL: inflation rate; and CRISIS: dummy variable which takes 1 for 2008 and 2009 years and
0 otherwise
Correlation matrix
 IMEFM correct the presence of serial correlation and heteroskedasticity and takes care of the
endogeneity problem.
7,2 3.2.3 Control variables. To minimize specification bias and isolate the effects of bank
characteristics on performance, not captured by the ownership variables, it is necessary
to control internal/external factors proposed in the literature. We used the logarithm of
total assets of the bank as the measurement for its size (SIZE). Larger firms may be more
152 efficient, as they exploit economies of scale and have the ability to diversify risk (Sufian,
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

2006). Besides, we use the logarithm of age of bank from the date of establishment (AGE)
to control the firm age. Older firms present difficulty in adapting to changes, which leads
to lower performance. Bank leverage (LEV), measured by the ratio of total debts to total
assets, and capital adequacy ratio (CAR) represent other specific bank variables.
Literature reports mixed results between bank performance, total debt and capital
adequacy ratio. To control changes in the financial landscape and structure among
banking groups operating in different countries, GDP growth (GDP), inflation rate (INF)
and the impact of the 2008 financial crisis (CRISIS) are introduced in the model. The
latter takes a value of 1 for the financial crisis period (2008 and 2009) and 0 otherwise.
The correlation matrix confirmed also the absence of multicollinearity between bank
specific variables and macro economic factors.

4. Empirical results
4.1 Descriptive statistics
Table III displays descriptive statistics for various measures of ownership
concentration (C1, C3 and C5) across all bank-years in the sample.
Table III shows that the larger shareholders (C1) owns 48.7 per cent. At the median,
C1 and C3 own 37.2 per cent and 65.9 per cent, respectively. The median larger
blockholder (C1) for Islamic banks is larger compared with the Anglo-American
standards and with those in France and Spain, which ranges between 20 per cent and 34
per cent, respectively (Becht and Röell, 1999). The mean of the other measure of
concentration C5 is about 70 per cent ranging from 6.52 per cent to 100 per cent. Data
reveal a substantial variation across banks in ownership concentration. Despite the
large average, the minimum value for the largest owner’s holding (C1) is 3.21 per cent
and the maximum value is 100 per cent. Obviously, the ownership structure indicates
that Islamic banks have a single controlling shareholder.
To further refine ownership concentration structure of Islamic banks, block holdings
are classified into six intervals (Table IV). We consider 10 per cent as width of the
interval for the first five successive classes, and the latter class includes bank
observations for which concentration level is ⬎ 50 per cent. Table IV confirms our
earlier findings. Most of the Islamic banks have a concentrated ownership structure, and

Mean Min. SD Max. p25 p50 p75

C1 48.71 3.21 30.18 100 25 37.2 73.68

C3 63.96 6.39 28.29 100 41.09 65.9 89.87
C5 69.76 6.52 27.90 100 47 80 98.87
Table III.
Ownership concentration Notes: Where C1: the percentage of shares held by the largest shareholders; C3: the percentage of the
measures first three largest shareholders; and C5: the percentage of the first five largest shareholders
 Ownership share C1 C3 C5
Ownership
structure and
0-10 per cent 2 1 1
10-20 per cent 7 2 3 financial
20-30 per cent 9 3 1 performance
30-40 per cent 9 5 3
40-50 per cent 5 6 5
153
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

ⱖ 50 per cent 21 36 40
Total 53 53 53
Table IV.
Notes: Where C1: the percentage of shares held by the largest shareholders; C3: the percentage of the Distribution of bank-years
first three largest shareholders; and C5: the percentage of the first five largest shareholders by ownership share

very few banks have a dispersed structure (concentration is ⬍ 20 per cent). Based on La
Porta et al.’s (1999) definition of ultimate owners, Table IV reports that only 17 per cent
(9 of 53), 5.66 per cent (3 of 53) and 7.5 per cent (4 of 53) of banks in our sample have a
dispersed structure, respectively, on C1, C3 and C5 concentration measures. It also
shows that the per cent of bank-year observations in the four ownership categories is
predominantly concentrated in the hands of a few shareholders, who are generally
institutional investors but occasionally government or family investors. In fact, out of 53
banks, 41 are institutional (77.35 per cent), 7 are state (13.2 per cent) and 5 retain a family
majority stake (9.43 per cent).
Table V exhibits that ROA and ROE stood at comfortable levels compared to
international standards until 2008. The sharp drop of Islamic bank performance can be
attributed to the 2008 crisis consequences. Minimum and maximum values for ROA and
ROE are ⫺44.35 to 38.25 and ⫺168.09 to 46.81, respectively. ROE SD increases from
18.68 in 2005 to 31.79 in 2009. This higher variation deviation indicates strong volatility
of earnings and a high risk of Islamic banks. Banks are well capitalized with CAR ratios
above the minimum, varying between 24 per cent and 33 per cent. They also have
comfortable leverage ratios compared to international standards reaching a mean 17 per
cent. The average value of bank assets is 2.73E ⫹ 07 (USD), and the average number of
years the banks have been in business is 16.8 years. The oldest bank is 49 years old, and
the newest is 1 year old.

4.2 Regression analysis

Results for the three models estimating performance with three concentration measures
(C1, C3 and C5) and three owners identity specifications (institutional, government and
family ownership) are shown in Tables VI and VII, respectively, for ROA and ROE.
All blockholder measures (C1, C3 and C5) exhibit absence of any impact of
concentration ownership on Islamic bank performance in all regression models. This
finding is consistent with the neutrality thesis advanced by Demsetz (1983) and reported
by other studies of conventional banks (Demsetz and Lehn, 1985; Holderness and
Sheehan, 1988). For Islamic banks, ownership concentration is considered as an
endogenous variable, and maximizing the bank value depends mainly on bank
operational characteristics and those of the external environment.
Evidence indicates that bank performance depends on the identity of the block
ownership. State and family shares have positive and significant impact on bank
 IMEFM performance in ROA and ROE models. Banks tend to exhibit higher levels of
performance if their largest owner is a state or a family investor. Thus, performance of
7,2 state-owned bank increases when the government is a large shareholder, suggesting
that state ownership is not necessarily less efficient than private ownership. This
finding is consistent with those of Abbas et al. (2009). This result is relevant, as banking
sectors in GCC have significant government and quasi government sector ownership (Al
154 Hassan et al., 2010). However, we find a negative relationship between institutional
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

ownership and bank performance, in contradiction with the findings of Abbas et al.
(2009) and Pound’s (1988) “efficient monitoring hypothesis”. Our results are rather
consistent with the “conflict of interest hypothesis” and “strategic alignment
hypothesis”, which postulate that institutional investors rather seek to maintain
business relationships at the expense of increased management control. Such behaviors
lead to an inefficient monitoring, justifying this negative effect on a bank’s performance.
Regarding family identity, results provide a positive and significant relationship in both
models (ROA and ROE), intending that family ownership creates an environment of love
and commitment necessary for better performance resulting in lower agency costs
(Anderson and Reeb, 2003). Finally, foreign presence has a negative and significant
contribution only in ROA regressions, implying that the foreign presence is not
associated with better performance. This result is consistent with Sufian and
Habibullah (2010), who attributed this to the different levels of knowledge between
domestic/foreign markets. It supports the “liability of foreignness hypothesis”, as
foreign banks’ abilities to access better risk management are made possible under
favorable regulatory and economic environments. This negative effect is not surprising,
as data collected indicate that most foreign investors are coming from developing
countries, whereas it is expected that foreign owner-managers coming from developed
countries have superior technical management and better skills.
With regards to control variables, results are in agreement with the predictions of the
earlier literature. GDP growth exhibits a positive and statistically significant
relationship in all regression models. The economic growth probably induces increasing
demand for bank financial services and loans and thus higher output. When we control
for the 2008 subprime crisis, the dummy variable CRISIS is negative and significant,
implying that the stock market has a negative impact on the Islamic banking
performance sector during this economic turbulent period. The significantly positive
association between AGE and profitability suggests that older banks are more likely to
record higher profits unlike the finding of Al Hassan et al. (2010). Bank SIZE exhibits
positive coefficients and is statistically significant, suggesting that the larger the bank,
the better performance the bank will have because of the economies of scale arguments.
Finally, results indicate a negative and significant relationship between CAR and ROE,

ROA ROE LEV CAR SIZE AGE

Mean 1.71 6.73 16.99 28.82 2.73E⫹07 14.16

Table V. Median 1.49 10.07 0.54 18.3 3805500 9
Descriptive statistics of Min. ⫺44.35 ⫺168.09 0 ⫺2.1 25961 1
dependent and control Max. 38.25 46.81 577.55 99 3.73E⫹08 49
variables SD 7.93 21.55 79.62 22.34 6.61E⫹07 12.45
 Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

M1 M2 M3

C1 ⫺0.00507 (⫺0.51) ⫺0.0072 (⫺0.75) ⫺0.0011 (⫺0.11)

C3 ⫺0.0104 (⫺0.95) ⫺0.0137 (⫺1.40) ⫺0.007 (⫺0.63)
C5 ⫺0.0126 (⫺1.31) ⫺0.0172* (⫺1.89) ⫺0.010 (⫺1.03)
FORG ⫺1.104** (⫺2.03) ⫺0.967* (⫺1.75) ⫺0.681 (⫺1.21) ⫺0.998** (⫺1.98) ⫺0.846* (⫺1.79) ⫺0.695 (⫺1.42) ⫺1.049** (⫺2.40) ⫺0.965** (⫺2.24) ⫺0.727* (⫺1.66)
LEV ⫺0.002 (⫺0.45) ⫺0.002 (⫺0.36) ⫺0.0017 (⫺0.32) ⫺0.002 (⫺0.40) ⫺0.00098 (⫺0.17) ⫺0.0012 (⫺0.20) ⫺0.0016 (⫺0.32) ⫺0.00102 (⫺0.19) ⫺0.0008 (⫺0.16)
CAR 0.0209 (1.48) 0.0171 (1.24) 0.0163 (1.15) 0.0142 (0.95) 0.0101 (0.70) 0.0114 (0.77) 0.0108 (0.84) 0.00763 (0.59) 0.0077 (0.59)
SIZE 0.168 (1.38) 0.154 (1.28) 0.118 (0.89) 0.155 (1.25) 0.130 (1.15) 0.118 (0.92) 0.161 (1.47) 0.187* (1.69) 0.116 (0.98)
AGE 0.412 (1.06) 0.326 (0.88) 0.378 (0.95) 0.432 (1.15) 0.353 (1.03) 0.386 (1.04) 0.441 (1.33) 0.459 (1.44) 0.387 (1.15)
GDP 0.253*** (4.93) 0.259*** (4.97) 0.238*** (4.61) 0.240*** (4.69) 0.256*** (4.89) 0.232*** (4.48) 0.241*** (5.03) 0.245*** (5.04) 0.233*** (4.78)
INFL 0.0112 (0.26) 0.00367 (0.08) 0.0141 (0.33) 0.0122 (0.28) ⫺0.00047 (⫺0.01) 0.00826 (0.19) 0.0184 (0.47) 0.00830 (0.20) 0.0116 (0.30)
CRISIS ⫺0.941*** (⫺2.85) ⫺0.870** (⫺2.57) ⫺0.875*** (⫺2.64) ⫺0.974*** (⫺2.93) ⫺0.896*** (⫺2.59) ⫺0.909*** (⫺2.72) ⫺0.943*** (⫺3.07) ⫺0.901*** (⫺2.85) ⫺0.842*** (⫺2.71)
INST ⫺1.704*** (⫺3.35) ⫺1.609*** (⫺2.98) ⫺1.556*** (⫺3.21)
GOV 1.008* (1.72) 1.041* (1.83) 1.001* (1.80)
FAM 2.447*** (2.63) 2.201** (2.34) 2.020** (2.29)
Constant ⫺1.361 (⫺0.53) ⫺2.310 (⫺0.95) ⫺2.330 (⫺0.87) ⫺0.667 (⫺0.27) ⫺1.305 (⫺0.61) ⫺1.708 (⫺0.70) ⫺0.569 (⫺0.26) ⫺1.978 (⫺0.93) ⫺1.348 (⫺0.61)
N 234 234 234 230 230 230 227 227 227
Wald
test ␹2 69.3 55.08 57.64 64.61 55.54 57.14 73.83 62.60 61.05

Notes: Where C1: the percentage of shares held by the largest shareholders; C3: the percentage of the first three largest shareholders; C5: the percentage of the first five largest shareholders; FORG: dummy variable that
takes 1 if there is presence of foreign shareholders and 0 otherwise; LEV: total debts scaled by total asset; CAR: capital adequacy ratio; SIZE: logarithm of total assets; AGE: the logarithm of age of bank from the date of
incorporation; GDP: gross domestic product growth; INFL: inflation rate; CRISIS: dummy variable which takes 1 for 2008 and 2009 years and 0 otherwise; INST: dummy variable which takes 1 if for the largest owner is
institutional and 0 otherwise; GOV: dummy variable which takes 1 if for the largest owner is the government and 0 otherwise; and FAM: dummy variable which takes 1 if for the largest owner is a family and 0 otherwise.
Significance at: * 10; ** 5 and *** 1 per cent levels, respectively; values in parentheses are t-statistics. Estimations were performed using generalized least squares

ROA models
Table VI.
Multiple regressions for
155
performance
financial
structure and
Ownership
 Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

7,2

156

Table VII.
IMEFM

ROE models
Multiple regressions for
M1 M2 M3

C1 0.005 (0.13) 0.0061 (0.18) 0.010 (0.25)

C3 ⫺0.039 (⫺1.17) ⫺0.030 (⫺1.27) ⫺0.035 (⫺1.07)
C5 ⫺0.042 (⫺1.54) ⫺0.0398 (⫺1.37) ⫺0.0401 (⫺1.43)
FORG ⫺2.214 (⫺1.02) ⫺1.886 (⫺0.93) ⫺1.890 (⫺0.83) ⫺2.266 (⫺1.26) ⫺2.007 (⫺1.60) ⫺2.155 (⫺1.22) ⫺2.244 (⫺1.35) ⫺1.979 (⫺1.14) ⫺2.037 (⫺1.22)
LEV ⫺0.0084 (⫺0.48) ⫺0.00563 (⫺0.33) ⫺0.007 (⫺0.39) ⫺0.0063 (⫺0.34) 0.0082 (0.65) ⫺0.0009 (⫺0.05) ⫺0.0053 (⫺0.29) ⫺0.0057 (⫺0.31) ⫺0.00249 (⫺0.14)
CAR ⫺0.050 (⫺1.11) ⫺0.047 (⫺1.10) ⫺0.0504 (⫺1.13) ⫺0.0761* (⫺1.85) ⫺0.0915** (⫺2.52) ⫺0.0791** (⫺1.99) ⫺0.0462 (⫺1.53) ⫺0.0407 (⫺1.34) ⫺0.0518* (⫺1.70)
SIZE 0.706* (1.76) 0.670* (1.75) 0.700 (1.63) 0.758** (1.99) 0.530** (2.01) 0.689* (1.80) 1.128*** (2.84) 1.178*** (2.77) 1.159*** (2.78)
AGE 2.853** (2.02) 2.528** (1.97) 3.056** (2.14) 2.702** (2.05) 2.244** (2.47) 2.823** (2.26) 2.858** (2.51) 2.734** (2.32) 2.870** (2.53)
GDP 0.932*** (5.12) 0.980*** (5.50) 0.94*** (5.25) 0.953*** (5.40) 1.008*** (6.29) 0.969*** (5.55) 1.081*** (6.86) 1.124*** (7.13) 1.065*** (6.85)
INFL 0.209* (1.88) 0.212* (1.84) 0.213* (1.75) 0.191* (1.79) 0.225** (2.14) 0.206* (1.80) 0.181 (1.51) 0.170 (1.38) 0.201 (1.59)
CRISIS ⫺4.561*** (⫺4.12) ⫺4.555*** (⫺4.11) ⫺4.02*** (⫺3.49) ⫺4.570*** (⫺4.27) ⫺6.574*** (⫺7.28) ⫺4.444*** (⫺4.01) ⫺3.479*** (⫺3.39) ⫺3.162*** (⫺3.05) ⫺3.446*** (⫺3.27)
INST ⫺6.016*** (⫺3.18) ⫺6.230*** (⫺3.36) ⫺6.377*** (⫺3.46)
GOV 5.477*** (2.68) 5.177*** (3.42) 5.291** (2.31)
FAM 5.301 (1.59) 4.799 (1.55) 5.372* (1.72)
Constant ⫺6.480 (⫺0.76) ⫺11.49 (⫺1.43) ⫺12.82 (⫺1.44) ⫺3.457 (⫺0.47) ⫺4.731 (⫺0.86) ⫺8.649 (⫺1.19) ⫺10.69 (⫺1.59) ⫺17.89*** (⫺2.62) ⫺16.97** (⫺2.52)
N 234 234 234 230 230 230 227 227 227
Wald
test ␹2 120.37 139.83 108.48 142.26 158.79 137.69 220.61 201.62 205.25

Notes: Where C1: the percentage of shares held by the largest shareholders; C3: the percentage of the first three largest shareholders; C5: the percentage of the first five largest shareholders; FORG: dummy variable that
takes 1 if there is presence of foreign shareholders and 0 otherwise; LEV: total debts scaled by total asset; CAR: capital adequacy ratio; SIZE: logarithm of total assets; AGE: the logarithm of age of bank from the date of
incorporation; GDP: gross domestic product growth; INFL: inflation rate; CRISIS: dummy variable which takes 1 for 2008 and 2009 years and 0 otherwise; INST: dummy variable which takes 1 if for the largest owner is
institutional and 0 otherwise; GOV: dummy variable which takes 1 if for the largest owner is the government and 0 otherwise; and FAM: dummy variable which takes 1 if for the largest owner is a family and 0 otherwise.
Significance at: * 10; ** 5 and *** 1 per cent levels, respectively; values in parentheses are t-statistics. Estimations were performed using generalized least squares
 Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

M1 M2 M1 M2
ROA ROA ROA ROA ROA ROA ROE ROE ROE ROE ROE ROE

CONC ⫺0.0454 ⫺0.134 0.685 ⫺1.018 ⫺0.870 0.271

(⫺0.05) (⫺0.16) (0.66) (⫺0.35) (⫺0.34) (0.09)
HERF ⫺0.000053 ⫺0.00082 ⫺0.0 ⫺0.000050 ⫺0.000045 ⫺0.0000
(⫺0.62) (⫺0.94) (⫺0.25) (⫺0.15) (⫺0.15) (⫺0.03)
FORG ⫺0.979* ⫺0.729 ⫺0.781 ⫺1.079** ⫺0.956* ⫺0.670 ⫺2.219 ⫺2.013 ⫺2.038 ⫺2.545 ⫺2.209 ⫺2.288
(⫺1.96) (⫺1.61) (⫺1.62) (⫺2.04) (⫺1.79) (⫺1.24) (⫺1.22) (⫺1.18) (⫺1.04) (⫺1.22) (⫺1.16) (⫺1.05)
LEV ⫺0.002 ⫺0.001 ⫺0.001 ⫺0.002 ⫺0.00227 ⫺0.001 ⫺0.008 ⫺0.00511 ⫺0.0086 ⫺0.008 ⫺0.00498 ⫺0.0062
(⫺0.51) (⫺0.21) (⫺0.33) (⫺0.49) (⫺0.41) (⫺0.33) (⫺0.44) (⫺0.30) (⫺0.46) (⫺0.47) (⫺0.30) (⫺0.34)
CAR 0.0261 0.0207 0.0242 0.0201 0.0163 0.0155 ⫺0.0640 ⫺0.0566 ⫺0.0599 ⫺0.0475 ⫺0.0489 ⫺0.0474
(1.59) (1.33) (1.46) (1.44) (1.19) (1.12) (⫺1.39) (⫺1.34) (⫺1.28) (⫺1.11) (⫺1.22) (⫺1.14)
SIZE 0.172 0.119 0.119 0.164 0.157 0.114 0.725* 0.707* 0.691 0.743* 0.672* 0.739*
(1.33) (0.94) (0.87) (1.34) (1.30) (0.87) (1.75) (1.77) (1.52) (1.88) (1.83) (1.78)
AGE 0.544 0.413 0.531 0.397 0.332 0.345 2.720* 2.449* 2.908** 2.685* 2.388* 2.909**
(1.42) (1.20) (1.41) (1.04) (0.91) (0.89) (1.94) (1.91) (1.99) (1.93) (1.90) (2.07)
GDP 0.249*** 0.263*** 0.230*** 0.254*** 0.259*** 0.239*** 0.944*** 0.997*** 0.918*** 0.956*** 0.999*** 0.972***
(4.75) (4.83) (4.32) (4.95) (4.96) (4.63) (4.96) (5.37) (4.86) (5.36) (5.74) (5.54)
INFL 0.0201 0.00985 0.0145 0.00819 ⫺0.00120 0.0120 0.205* 0.206* 0.211* 0.206* 0.213* 0.214*
(0.47) (0.21) (0.34) (0.19) (⫺0.03) (0.28) (1.85) (1.78) (1.70) (1.87) (1.91) (1.79)
CRISIS ⫺0.966*** ⫺0.892** ⫺0.880*** ⫺0.902*** ⫺0.822** ⫺0.860** ⫺4.486*** ⫺4.483*** ⫺3.964*** ⫺4.578*** ⫺4.703*** ⫺4.12***
(⫺2.89) (⫺2.55) (⫺2.61) (⫺2.71) (⫺2.39) (⫺2.57) (⫺4.03) (⫺4.01) (⫺3.38) (⫺4.20) (⫺4.35) (⫺3.65)
INST ⫺1.622*** ⫺1.688*** ⫺5.932*** ⫺6.119***
(⫺2.96) (⫺3.28) (⫺3.15) (⫺3.25)
GOV 1.051* 0.974 5.680*** 5.572***
(1.93) (1.63) (2.71) (2.77)
FAM 2.734** 2.419*** 4.770 5.273
(2.41) (2.62) (1.47) (1.59)
Constant ⫺2.291 ⫺2.523 ⫺3.524 ⫺1.333 ⫺2.402 ⫺2.144 ⫺5.268 ⫺10.70 ⫺11.69 ⫺6.105 ⫺10.56 ⫺12.57
(⫺0.89) (⫺1.09) (⫺1.35) (⫺0.53) (⫺1.02) (⫺0.83) (⫺0.68) (⫺1.46) (⫺1.38) (⫺0.74) (⫺1.37) (⫺1.48)
N 234 234 234 234 234 234 234 234 234 234 234 234
Wald test ␹2 66.12 57.98 57.19 67.05 52.67 56.80 111.51 133.16 95.08 135.59 158.53 125.30

Notes: Where CONC: a dummy variable which takes the value of 1 if the ultimate owners as the largest controlling shareholders exceeding 20 per cent in the bank; HERF: the Herfindahl index of ownership concentration
which represents the sum of squared percentage of shares controlled by each top five shareholders; FORG: dummy variable that takes the value of 1 if there is presence of foreign shareholders and 0 otherwise; LEV: total
debts scaled by total asset; GOV: dummy variable which takes 1 if for the largest owner is the government and 0 otherwise; FAM: dummy variable which takes 1 if for the largest owner is a family and 0 otherwise CAR:
capital adequacy ratio; SIZE: the logarithm of total assets of the bank; AGE: the logarithm of age of bank from the date of incorporation; GDP: gross domestic product growth; INFL: inflation rate; CRISIS: dummy variable
which takes 1 for 2008 and 2009 years and 0 otherwise; and INST: dummy variable which takes 1 if for the largest owner is institutional and 0 otherwise. Significance at: * 10; ** 5 and *** 1 per cent levels, respectively;
values in parentheses are t-statistics. Estimations were performed using generalized least squares

Table VIII.
Robustness tests
157
performance
financial
structure and
Ownership
 IMEFM indicating that less profitable banks are involved in riskier operations, leading to riskier
credit portfolios (Sufian, 2010).
7,2
4.3 Robustness tests
We also performed numerous robustness tests of our results. First, to further refine the
insignificant relationship between ownership concentration and bank performance, two
158 other measures of ownership concentration deducted from the literature were used. On
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

one hand, a dummy variable CONC was included in the model. It takes the value of 1 if
the ultimate owners are the largest controlling shareholders exceeding 20 per cent in the
bank as defined by La Porta et al. (1999). On the other hand, the Herfindahl index
(HERF), considered as another proxy of ownership concentration, was tested. It presents
the sum of a squared percentage of shares controlled by each of the top five shareholders
(Zeitun and Tian, 2007). Results remain unchanged as reported in Table VIII. CONC and
HERF are not statistically significant on bank performance measures, which is
consistent with our earlier findings. In a second step, we use an alternative definition of
concentration ownership; a bank is considered as concentrated if the largest controlling
shareholders exceed 50 per cent instead of 20 per cent. We find that our results are
robust. Furthermore, we remove the top and bottom 1 per cent of the sample to mitigate
outliers. Results remain similar to our initial findings in terms of directions and
significance level, which confirms the robustness of our regressions. Finally, to ensure
that our results are not driven by the country effect, we re-estimated our models by
introducing each country variable separately. Findings remain unchanged.

5. Conclusion and policy recommendations

Using 53 Islamic banks in 15 countries during 2005-2009, this paper sheds some light on
the impact of ownership structure on bank performance. Overall, results show that
concentrated equity ownership is a common feature in Islamic banks. Ownership
structure is highly concentrated, as ⬎ 70 per cent equity is dominated by the top five
shareholders. Therefore, a very small portion of Islamic banks have a dispersed
ownership structure. Moreover, the majority of Islamic banks in the sample are
institutional owned. Family and state ownership affect positively a bank’s performance.
Banks with institutional and foreign shareholders do not perform better. In addition,
findings point out that ownership concentration does not impact Islamic banking
performance according to neutrality thesis. We infer that the control scheme of Islamic
banks differs from the conventional one. Depositors have some ownership rights unlike
shareholders. In fact, besides the current accounts, Islamic banks offer investment
accounts based on the principle of sharing profits and losses. The latter do not guarantee
a fixed return, but the owners are involved in performance of the bank in proportion to
their financial contribution, according to a sharing ratio predetermined. This difference,
compared to conventional banks, introduces an element of mutuality in Islamic banking,
making its depositors as customers with some ownership rights in it. The owners of
capital (rabbul-mal) can be treated as temporary shareholders. Moreover, Islamic banks
opting mostly for mutual organizational form will have more democratic character,
enabling their depositors to enjoy some ownership rights.
This study is important both from an operational and academic point of view. The
findings have also provided useful information to bank managers, government
regulators, investors and policy makers pertaining to the importance of the role of
 corporate governance practices in the Islamic banking system and its performance. Ownership
Financial performance can be improved by identifying practices associated with ownership
structure. So, it will have policy implications for Islamic banks as to how to improve their
structure and
performance. Finally, different types of bank ownership have had different concerns about financial
implementing corporate governance practices among Islamic banks. performance
For further research, it is highly recommended to cover more Islamic banks, and it is
interesting to include the percentage of the largest capital held referring to owner 159
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

category instead of dummy variables.

References
Abbas, S.Z., Rahman, R.A. and Mahenthiran, S. (2009), “Ultimate ownership structure and
performance of Islamic institutions in Malaysia”, FMA International First Asian Conference.
Agrawal, A. and Knoeber, C.R. (1996), “Firm performance and mechanisms to control agency
problems between managers and shareholders”, Journal of Financial and Quantative
Analysis, Vol. 31 No. 3, pp. 377-397.
Al-Hassan, A., Khamis, M. and Oulidi, N. (2010), “The GCC banking sector: topography and
analysis”, Working paper, FMI 10/87 April.
Anderson, R.C. and Reeb, D.M. (2003), “Founding-family ownership and firm performance:
evidence from the S&P500”, Journal of Finance, Vol. 58 No. 3, pp. 1301-1328.
Ang, J.S. and Ding, D.K. (2006), “Government ownership and the performance of government
linked companies: the case of Singapore”, Journal of Multinational Financial Management,
Vol. 16 No. 1, pp. 64-88.
Becht, M. and Röell, A. (1999), “Block holdings in Europe: an international comparison”, European
Economic Review, Vol. 43 Nos. 4/6, pp. 1049-1056.
Boubakri, N.J.C. Cosset,G. and Fisher, K. (2005), “Ownership structure and the performance of
privatized banks”, Journal of Banking and Finance, Vol. 29 No. 8, pp. 2015-2041.
Claessens, S., Djankov, S., Fan, J.P.H. and Lang, L.H.P. (2002), “Disentangling the incentive and
entrenchment effects of large shareholdings”, Journal of Finance, Vol. 57 No. 6,
pp. 2741-2771.
Claessens, S., Djankov, S. and Lang, L.H.P., (2000), “The separation of ownership and control in
East Asian corporations”, Journal of Financial Economics, Vol. 58 Nos. 1/2, pp. 81-112.
Demsetz, H. (1983), “The structure of ownership and the theory of the firm”, Journal of Law and
Economic, Vo1. 26 No. 2, pp. 357-390.
Demsetz, H. and Lehn, K. (1985), “The Structure of corporate ownership: causes and
consequences”, Journal of Political Economy, Vol. 93 No. 6, pp. 1155-1177.
Elyasiani, E. and Mehdian, S.M. (1997), “A non-parametric frontier model for foreign and domestic
owned banks cost structure”, International Journal of Finance, Vol. 9 No. 1, pp. 1069-1079.
Holderness, C.G. and Sheehan, D.P. (1988), “The role of majority shareholders in publicly held
corporations: an exploratory analysis”, Journal of Financial Economics, Vol. 20 Nos. 1/2,
pp. 317-346.
International Monetary Fund (2010), “The GCC Banking Sector: Topography and Analysis”,
Prepared by Abdullah A.-H., May K. and Nada O.; Monetary and Capital Markets and
Middle East and Central Asia Departments WP/10/87 IMF Working Paper April 2010.
Jensen, M. and Meckling, W. (1976), “Theory of the firm: managerial behavior, agency cost and
ownership structure”, Journal of Financial Economics, Vol. 3 No. 4, pp. 305-360.
 IMEFM Kabir Hassan, M. (2005), “Financial liberalization and foreign bank entry on Islamic banking
performance”, 12th ERF Conference Paper.
7,2 Kim, P.K., Rasiah, D. and Tasnim, R.B. (2012), “A review of corporate governance: ownership
structure of domestic-owned banks in term of government connected ownership, and
foreign ownership of commercial banks in Malaysia”, Journal of Organizational
Management Studies, Vol. 2012 No. 2012, pp. 1-18.
160 La Porta, R., Lopez-de-Silanes, F. and Shleifer, A. (1999), “Corporate ownership around the world”,
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

Journal of Finance, Vol. 54 No. 2, pp. 471-517.

La Porta, R., Lopez-de-silanes, F. and Shleifer, A. (2002), “Government ownership of banks”,
Journal of Finance, Vol. 57 No. 1, pp. 265-301.
Leech, D. and Leahy, J. (1991), “Ownership structure, control type classifications and the
performance of large British companies”, The Economic Journal, Vol. 101 No. 409,
pp. 1418-1437.
Pound, J. (1988), “Proxy contests and efficiency of shareholder oversight”, Journal of financial
economics, Vol. 20 Nos. 1/2, pp. 237-265.
Sarkar, J. and Sarkar, S. (2000), “Large shareholder activism in corporate governance in
developing countries: evidence from India”, International Review of Finance, Vol. 1 No. 3,
pp. 161-194.
Shleifer, A. (1998), “State versus private ownership”, Journal of Economic Perspectives, Vol. 12
No. 4, pp. 133-150.
Shleifer, A. and Vishny, R. (1986), “Large shareholders and corporate control”, Journal of Political
Economy, Vol. 94 No. 3, pp. 461-488.
Shleifer, A. and Vishny, R.W. (1994), “Politicians and firms”, Quarterly Journal of Economics,
Vol. 109 No. 4, pp. 995-1025.
Shleifer, A. and Vishny, R. (1997), “A survey of corporate governance”, The Journal of Finance,
Vol. 52 No. 2, pp. 737-783.
Smith, A.J. (1996), “Corporate ownership structure and performance, managerial ownership and
the size effect”, Journal of portfolio management, Vol. 16 No. 3, pp. 33-39.
Stulz, R. (1999), “Globalization of equity markets and the cost of capital”, NBER working paper.
Sufian, F. (2006), “Size and returns to scale of the Islamic banking industry in Malaysia: foreign
versus domestic banks”, IUM Journal of Economics and Management, Vol. 14 No. 2,
pp. 147-175.
Sufian, F. (2010), “Does foreign presence foster Islamic banks’ performance? empirical evidence from
Malaysia”, Journal of Islamic Accounting and Business Research, Vol. 1 No. 2, pp. 128-147.
Sufian, F. and Habibullah, M.S. (2010), “Does foreign banks entry fosters bank efficiency?
empirical evidence from Malaysia”, Engineering Economics, Vol. 21 No. 5, pp. 464-474.
Thomsen, S. and Pedersen, T. (2000), “Ownership structure and economic performance in the
largest European companies”, Strategic Management Journal, Vol. 21 No. 6, pp. 689-705.
Zeitun, R. and Tian, G.G. (2007), “Does ownership affect a firm’s performance and default risk in
Jordan?”, Corporate governance, Vol. 7 No. 1, pp. 66-82.

Corresponding author
Sarra Ben Slama Zouari can be contacted at zouari_sarra@yahoo.fr

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints
 This article has been cited by:

1. Sugeng Wahyudi, Deki Nofendi, Robiyanto Robiyanto, Hersugondo Hersugondo. 2018. Factors affecting
return on deposit (ROD) of sharia banks in Indonesia. Business: Theory and Practice 19, 166-176. [Crossref]
2. Mohd Haniff Zainuldin, Tze Kiat Lui. 2018. Earnings management in financial institutions: A comparative
study of Islamic banks and conventional banks in emerging markets. Pacific-Basin Finance Journal .
[Crossref]
3. MezziNajla, Najla Mezzi. 2018. Efficiency of Islamic banks and role of governance: empirical evidence.
Downloaded by Government College University Faisalabad, Mr Nasir Mahmood At 02:44 24 September 2018 (PT)

Managerial Finance 44:5, 590-603. [Abstract] [Full Text] [PDF]

4. GrassaRihab, Rihab Grassa, ChakrounRaida, Raida Chakroun, HussaineyKhaled, Khaled Hussainey. 2018.
Corporate governance and Islamic banks’ products and services disclosure. Accounting Research Journal
31:1, 75-89. [Abstract] [Full Text] [PDF]
5. M. Kabir Hassan, Sirajo Aliyu. 2018. A contemporary survey of islamic banking literature. Journal of
Financial Stability 34, 12-43. [Crossref]
6. Musa Abdullahi Bayero. The Role of Ownership Structure in Moderating the Effects of Corporate
Financial Structure and Macroeconomic Condition on Financial Performance in Nigeria 155-175.
[Crossref]
7. Peterson Kitakogelu Ozili, Olayinka Uadiale. 2017. Ownership concentration and bank profitability. Future
Business Journal 3:2, 159-171. [Crossref]
8. Rihab Grassa. 2016. Corporate governance and credit rating in Islamic banks: Does Shariah governance
matters?. Journal of Management & Governance 20:4, 875-906. [Crossref]
9. MersniHounaida, Hounaida Mersni, Ben OthmanHakim, Hakim Ben Othman. 2016. The impact of
corporate governance mechanisms on earnings management in Islamic banks in the Middle East region.
Journal of Islamic Accounting and Business Research 7:4, 318-348. [Abstract] [Full Text] [PDF]
10. Girish Karunakaran Nair, Nidhi Choudhary. 2016. The Impact of Service Quality on Business Performance
in Qatar-Based Hotels: An Empirical Study. The Journal of Hospitality Financial Management 24:1, 47-67.
[Crossref]