Banks' Orientation and Performance in Stakeholders-Shareholders Business Systems

Tarek Ibrahim Eldomiaty, Chong Ju Choi
  • SSRN Electronic Journal, January 2003, Elsevier
  • DOI: 10.2139/ssrn.462600

Stakeholders-oriented banks and bank performance Perspectives from international business management

What is it about?

This research paper aims at examining the relationship between the relatively strong banking industries and the values of stakeholder systems. The authors compare international successful stock markets systems such as the US and the UK with successful stakeholder systems such as Japan, Germany, and most of continental Europe.

Why is it important?

This research paper contributes to the literature in terms of presenting empirical evidence that the theoretical relationships of stakeholder management are supported by the banking industry as viable financial institutions.

Perspectives

Professor Tarek Ibrahim Eldomiaty
Misr International University

The findings show that finance directors share with the corporate loan managers the concerns of corporate stakeholders’ interests and the importance of shareholders and creditors as complementary sources of financing. Regarding the stakeholders’ effects on banks performance, the results show that: banks’ support to shareholders interests is positively associated with banks profitability and liquidity, banks support to suppliers’ interest is positively associated with banks’ profitability, capital adequacy, and asset quality, banks’ support to the creditors’ interest is positively associated with bank’s liquidity. Banks’ support to unions, suppliers, and government relations is positively associated with bank’s liquidity, and banks’ support to corporate employees and managers is positively associated with bank’s asset quality. Overall, the results conclude that banks’ performance is positively associated with their orientations toward fulfilling corporate stakeholders’ interests.

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http://dx.doi.org/10.2139/ssrn.462600

The following have contributed to this page: Professor Tarek Ibrahim Eldomiaty