The relationship between ownership structure of banks and financial performance: An empirical research for Turkey

In this study, ownership structures of banks and their effects on financial performance will be investigated. For this purpose the concept of ownership structure will be examined within the framework of corporate governance. The basic concepts of ownership are the ownership concentration and ownership identity. As the ownership concentration variable, while the share of the largest shareholder and the share of the largest three shareholder are evaluated, family ownership, managerial ownership, foreign ownership, institutional ownership and free float ratio have become the independent variables of the study. Return on assest (ROA), return on equity (ROE), Tobin's Q ratio, earnings per share and price to earnings ratio took part in the study as financial performance indicators. In order to examine the relationship between banks' ownership structures and their financial performance, quarterly data of banks operating Borsa Istanbul (BIST) for the period 2005-2017 were used. Five different models were set up to examine the relationship between the variables and regression analyses were done. When we generally evulate the results of our research, we can say that ownership structure has an impact on the financial performance of the banks. In terms of banks in Turkey, it was founded that ownership concentration and family ownership has a positive impact on financial performance, especially managerial ownership's negative effects on financial performance, these findings support the agency theory which is the one of basic theory of the research. Among the variables of ownership structure, instutional ownership and free float ratio have negative impact on return on assets (ROA), return on equity (ROE) and profit per share. Moreover, the share of the largest three shareholder has negative impact on Tobin's Q ratio and profit per share. Depending on corporate governance practises, the relationship between stakeholders, shareholders, managers and regulatory agencies may vary from country to country. Evaluating the results in the context of Turkey contribute to the concept of corporate governance, the top management of the banks, investors and academics.