Ownership dispersion and bank performance: Evidence from China

Using a unique hand-collected dataset of 115 China's commercial banks over the period 2007-2014, this paper investigates the effect of ownership dispersion on bank performance and explores the reason behind the relation. The results indicate that higher ownership dispersion improves return on assets (ROA), return on equity (ROE), and reduces the ratio of nonperforming loans (NPL). Moreover, lower ownership dispersion leads to higher loan concentration, testifying the hypothesis that ownership concentrated banks tend to offer huge loans to large enterprises that usually have connections with large shareholders.