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Ownership structure and financial performance: Evidence from Kenyan commercial banks

PloS one, 2022-05, Vol.17 (5), p.e0268301-e0268301 [Peer Reviewed Journal]

COPYRIGHT 2022 Public Library of Science ;2022 Kirimi et al. This is an open access article distributed under the terms of the Creative Commons Attribution License: http://creativecommons.org/licenses/by/4.0/ (the “License”), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;2022 Kirimi et al 2022 Kirimi et al ;ISSN: 1932-6203 ;EISSN: 1932-6203 ;DOI: 10.1371/journal.pone.0268301 ;PMID: 35594258

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  • Title:
    Ownership structure and financial performance: Evidence from Kenyan commercial banks
  • Author: Kirimi, Peter Njagi ; Kariuki, Samuel Nduati ; Ocharo, Kennedy Nyabuto
  • Chia, Ricky Chee Jiun
  • Subjects: Audited financial statements ; Banking industry ; Banks ; Biology and Life Sciences ; Commercial banks ; Corporate governance ; Decision making ; Earnings per share ; Engineering and Technology ; Equity ; Evaluation ; Financial management ; Influence ; Investments ; Management ; Market economies ; Ownership ; People and Places ; Physical Sciences ; Privatization ; Profitability ; Profits ; Research and Analysis Methods ; Social Sciences ; Structure
  • Is Part Of: PloS one, 2022-05, Vol.17 (5), p.e0268301-e0268301
  • Description: The study examined the relationship between ownership structure and financial performance of commercial banks in Kenya for the period 2009-2020. The data were collected from audited financial statements of 39 commercial banks in Kenya. Regression results found strong evidence on ownership structures in explaining the differences in commercial banks' financial performance. The results established that the greatest influence of ownership structures was on net interest margin at 53.04% and return on assets at 31.37%. Influence of ownership structures was found to be low on return on equity at 3.32% and earnings per share at 2.13%. The results found a negative association between state ownership and net interest margin, negative association between management ownership and both net interest margin and earnings per share, negative association between institutional ownership and return on assets and a negative association between foreign ownership and earnings per share. Based on the findings, commercial banks should vary their ownership structures to boost financial performance. Secondly, banks with high percentage of state ownership should consider partial privatization to improve corporate governance practices. Third, banks should adopt managerial ownership policy limiting the proportion of equity stock on executives to limit their powers in strategic decision making. Fourth, the study proposes a percentage limit on equity stock of an individual institutional investor. Lastly, the study proposes that bank's management to come up with a policy detailing the role and place of foreign investors in strategic decision making to ensure their presence in every decision undertaken by bank managers.
  • Publisher: United States: Public Library of Science
  • Language: English
  • Identifier: ISSN: 1932-6203
    EISSN: 1932-6203
    DOI: 10.1371/journal.pone.0268301
    PMID: 35594258
  • Source: PLoS
    GFMER Free Medical Journals
    PubMed Central
    ProQuest Central
    DOAJ Directory of Open Access Journals
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