Ownership and Control of Mutual Savings Banks in Korea

Abstract

This paper investigates examine the effects of ownership and control on mutual savings banks with respect to management performance and soundness in Korea. This study further verifies what factors determine the sustainability of mutual savings banks and and also examines how management structure affects their performance. First, for performance, corporate-owned mutual savings banks managed by professional CEOs seem to have a negative relationship with performance. Second, for firm sustainability as an independent variable, the difference in ownership structure does not affect the sustainability of savings banks when ownership is divided into corporate and private. Finally, according to the results of the logit model on whether the independent variables affect the management form and ownership structure, the largest shareholder’s participation in management was not affected by almost all variables, except for bank size. Moreover, ownership type had a positive effect on the management participation of the largest shareholder because most of the insolvent mutual savings banks were taken over by banks and other corporations when they became bankrupt.

Keywords: Ownership Structure, Management Performance, Sustainability, Management Form, Mutual Savings Banks