The impact of problem loan, ownership structure, and market structure upon the bank performance

Abstract

Some research on the causes of bank failure finds that failing institutions had large proportions of problem loans prior to failure, and that the extra costs of administering these loans reduced the bank performance. At this moment, if bank management goes after maximizing one's utility, not the bank performance, in addition confronting from rising competitive environment, it would be quite dangerous. So, this article studies the impact of problem loan, ownership structure, and market structure upon the bank performance with the basis of cost efficiency. Empirical results show that problem loan, ownership structure, and market structure have a significant effect upon the bank performance.