Other people’s money: The profit performance of Bangladeshi family dominated banks

Tasmina Mahbub, Kent Matthews, Kate Barker

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Abstract

Studies in developed economies show that family-owned non-financial firms outperform others, explained by agency theory and protection of family capital. Findings in emerging economies are equivocal, while studies of family domination and banks’ performance are scant. This paper examines the profit-performance of family-dominated banks in Bangladesh under competing hypotheses of bank-market structure. Using panel estimation, we model the profit-performance of banks and show that the principal drivers are costs, efficiency and non-performing loans. Family-dominated banks are less efficient and less profitable. The sources of weaker performance are higher non-performing loans and higher costs, with indirect evidence of poor corporate governance.
Original languageEnglish
JournalJournal of Behavioral and Experimental Finance
Early online date22 Nov 2018
DOIs
Publication statusPublished - 2019

Keywords

  • Bangladesh banking market
  • Profit performance
  • Family dominated banks
  • Corporate governance

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