Capital Structure, Shareholder Independence, and Performance of ASEAN Banks

Abstract

This paper investigates the efficiencies of leading commercial banks in five ASEAN countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand. The efficiency is measured in terms of technical efficiency by the DEA framework. The regression results show that Singaporean commercial banks lead the peers. Surprisingly, size of the banks impedes efficiency despite the fact that most banks run at constant return to scale. To get more insight, this study adds the shareholder independence indicator and concludes that shareholder independence and equity are key factors to enhance efficiency regardless of the host countries.