Property rights institutions and bank performance across countries

Walaa Wahid ElKelish, Jon Tucker

Research output: Contribution to journalArticle

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Abstract

Purpose – The purpose of this paper is to investigate the relationship between the quality of property rights institutions (PRIs) and bank financial performance in an empirical study of 136 countries over the period 1999-2006. Design/methodology/approach – The quality of PRIs and financial accounting-based measures of bank performance are obtained from the Economic Freedom of the World Project (Gwartney et al., 2006), the Polity IV Project, the World Bank data indicators database, and the International Monetary Fund. Several multiple regression analyses are conducted to test the study hypotheses. Findings – The results reveal that the quality of legal structure and security of PRIs positively (negatively) affects both bank cost efficiency (inefficiency) and profitability. The presence of a quality political structure negatively (positively) affects bank cost efficiency (inefficiency). The quality of political structure has no direct impact on bank profitability. The impact of PRIs on bank cost efficiency is more evident in the upper middle and high income group of countries than in the low and lower middle income group of countries. An appropriate level of PRI quality is essential to achieve both competition and development. Practical implications – The paper highlights policy implications for international policy makers, regulators, and the management of banks who are interested in banking sector development across countries. Originality/value – The study investigates the fundamental importance of PRI quality in its effect on the banking sector and extends the largely US-focused literature to a broader international setting.

Original languageEnglish
Pages (from-to)80-101
Number of pages22
JournalManagerial Finance
Volume41
Issue number1
DOIs
Publication statusPublished - 12 Jan 2015
Externally publishedYes

Fingerprint

Property rights
Bank performance
Inefficiency
Income
Banking sector
Multiple regression
International Monetary Fund
Data base
Design methodology
Politicians
World Bank
Policy implications
Profitability
International policy
Economic freedom
Financial performance
Bank profitability
Empirical study
Financial accounting

Bibliographical note

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

Keywords

  • Banking
  • Banking industry
  • Cost efficiency
  • Profitability
  • Property rights institutions

ASJC Scopus subject areas

  • Finance
  • Strategy and Management

Cite this

Property rights institutions and bank performance across countries. / ElKelish, Walaa Wahid; Tucker, Jon.

In: Managerial Finance, Vol. 41, No. 1, 12.01.2015, p. 80-101.

Research output: Contribution to journalArticle

ElKelish, Walaa Wahid ; Tucker, Jon. / Property rights institutions and bank performance across countries. In: Managerial Finance. 2015 ; Vol. 41, No. 1. pp. 80-101.
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