Ownership Structure and Bank Performance: Empirical Evidence from the UAE

Abstract

This study presents an empirical analysis of ownership structure and bank performance in the UAE banking system. To examine the control exerted by owners on bank performance, we employed a panel data on selected banks in the UAE from 2011 to 2017 using two-stage least squares to estimate the system of two equations. We use reverse causality to account for any endogeneity issues between ownership structure and bank performance. Our results found no reverse causality between ownership structure and bank performance. The study registered ownership structure to be a driver of bank performance but recorded bank performance not to be a driven factor of ownership structure. The study also found macroeconomic factors not to be impacted by both ownership structure and bank performance. The research could help in examining the nature of existing bank ownership structure in the economy and consequently aid the UAE government in developing ownership regulations for the banking industry.