On the non-linear relationship between large shareholders and bank performance: North African banks vs. banks in the Middle East

The paper aims to empirically assess the threshold effect in the large shareholders (LS) and bank performance relationship. We used a sample of MENA banks during the period 2004–2017. To get benefit from a comparative regional analysis, the whole sample was divided into two sub-samples, banks in the...

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Bibliographic Details
Published inRegional science policy & practice Vol. 16; no. 6
Main Authors Karmani, Majdi, Boussaada, Rim, Hakimi, Abdelaziz
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.06.2024
Subjects
bank performance
Large shareholders
MENA region
PSTR model
MENA region
C12
C23
G32
G34
Large shareholders
bank performance
PSTR model
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Summary:The paper aims to empirically assess the threshold effect in the large shareholders (LS) and bank performance relationship. We used a sample of MENA banks during the period 2004–2017. To get benefit from a comparative regional analysis, the whole sample was divided into two sub-samples, banks in the Middle East and banks in North Africa. We performed the Panel Smooth Transition Regression model (PSTR) as an econometric approach. Empirical results indicate a threshold effect in the large shareholders-bank performance relationship. Additionally, results show that this effect differs across regions. More specifically, we found that, below the threshold, large shareholders significantly decrease bank performance for the whole sample. Surpassing this threshold, the effect becomes positive. The opposite result was found for banks located in the Middle East region. However, no significant effect was found for banks in North African countries in almost regressions.
ISSN:1757-7802
1757-7802
DOI:10.1016/j.rspp.2024.100010