Ownership Structure and Non-Performing Loans: Evidence from Pakistan

Abstract

The main aim of this paper is to investigate the impact of ownership structure on the bank riskiness as measured by NPLs, by using traditional view that that concentrated ownership results in enhanced banking performance by reducing the bank riskiness, whereas dispersed ownership results in the reduced banking performance and increased bank riskiness against the opposite view that ownership concentration does not have impact on the bank riskiness. By using the data from Pakistani banking sector results suggested the validity of traditional view that publically owned banks (dispersed ownership) reduces the banks performance and enhance the banks riskiness (NPLs), whereas rejected the view that concentrated ownership (privately owned banks and foreign banks) enhances bank performance and erodes the bank riskiness.