dc.description.abstract | The subject of this paper is to analyze the ownership structures and company governance on bank performance. Taiwan finaicial market experiences many changes in past ten years. For example, it occured Asia financial crisis, card debt storm, subprime storm and the event of Fannie and Freddie. Many domestic banks face insolvency. It reveals the fragile constitution of Taiwan financial market. In order to solve this problem, the government releases some financial policies, such as first and second financial reforms. On the orther hand, some financial rules also be set up, it contains Financial Holding Company Act, Financial Institutions Merger Act, the amendatory acts of Company Law and Securities and Exchange Law. Because of the above rules and policies, it causes the ownership structure having an enormous change.
The first stage of my research refers to Berger et al. (2005) paper, using static, selection, and dynamic effects of ownership from 1997 to June 2008 to analyze bank previous performance before ownership structure change and also look at bank’s performance change after the ownership structure change. At the same time, I also refer to Choi and Hasan (2005) paper, doing the second stage research. In this stage, I analyze the effects of foreign or private fund ownership and their gorporate governence on bank performance.
From the results of first stage model, the static and selection effects show that state bank performances are poorer than other types of banks. And dynamic effects show that ownership structure change affect bank performance. But different ownership structure changes have dissimilar effect on diverse performance index. Some effects are potive and some are negative and some are none. From the second stage model results, the banks which have foreign ownership perform worse than other banks. But bank having foreign directors have better performance on quality of loan and profit. However foreign directors will make bank have more profit risks and let bank’s profits be unstable. In addition, private fund ownership makes banks have more quality of loan and profit stability. Nevertheless, the effects of private fund directors on bank performance are not obvious.
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