How multiple large shareholders affect bank profitability under the dispersion and the coalition hypotheses? An insight from the MENA region. Issue 1 (16th April 2020)

• Record Type: Journal Article
• Authors: Boussaada, Rim; Hakimi, Abdelaziz
• Is Part Of: International journal of managerial finance. Volume 17:Issue 1(2021)
• Page Start: 1
• Page End: 24
• Publication Date: 2020-04-16
• Subjects: Multiple large shareholders -- Bank profitability -- MENA region -- SGMM; G21 -- G32 -- G34; Corporations -- Finance -- Periodicals; 658.15
• DOI: 10.1108/IJMF-05-2019-0201
• Languages: English
• ISSNs: 1743-9132

Abstract

Abstract : Purpose: The aim of this paper is to examine whether multiple large shareholders and their interactions affect bank profitability in the MENA region. Design/methodology/approach: To achieve this goal, we used a sample of conventional banks in the MENA region observed during the period 2004–2015. We performed the System Generalized Method of Moment as the empirical approach. Findings: Empirical results indicate that under the dispersion hypothesis, multiple large shareholders (MLS) tend to reduce bank profitability for both return on assets (ROA) and return on equity (ROE). However, under the alignment of interests' hypothesis, coalition between the first and the second largest shareholder increases bank profitability only for ROA. We also find that an additional large shareholder, beyond the two largest, reduces bank return equity. Originality/value: To the best of our knowledge, to date, there is no study that investigates the effect of MLS and the bank profitability in the MENA region. Indeed, this study shows the importance of considering ownership composition among large shareholders in banking studies.