Title: Governance and bank's capital structure: empirical evidence from a cross countries analysis

Authors: Adeoye Amuda Afolabi

Addresses: National Universities Commission, PMB 237 Gariki GPO Maitama Abuja, Nigeria

Abstract: This paper examines the role of bank ownership structure on capital structure by [using the financial and ownership data from Caprio et al. (2007) that covered 244 banks across 44 countries]. We classified banks across the countries with geographical regional dummies indicating if the banks are located in Asia, Africa and Latin America (the reference category being OECD countries). We find that family-owner managed firms tend to have a lower debt. In addition, excessive control right of the controlling owner may significantly increase bank leverage. We suggest that in a family-owner managed firms there should be more dilution of ownership so that minority are not exploited as too much loan may lower bank value. Thus, banks need to be better regulated as excessive leverage has been identified as one of the reasons for the current financial crisis.

Keywords: excessive leverage; family ownership; owner managed firms; cash flow rights; OLS; banks; banking industry; bank capital structure; ownership; governance; ordinary least squares; cross country analysis; Asia; Africa; Latin America; OECD countries; Organisation for Economic Co-operation and Development; debt levels; excessive control rights; value; regulation; financial crises.

DOI: 10.1504/AJAAF.2014.066135

African Journal of Accounting, Auditing and Finance, 2014 Vol.3 No.2, pp.149 - 169

Received: 08 May 2021
Accepted: 12 May 2021

Published online: 03 Dec 2014 *

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