Ownership structure is known as the distribution of equity with relation to votes, capital and the identity of equity owners (Holderness et al., 1999). Ownership structure served as an important element in corporate governance by influencing the type of incentives managers receives from the firm. This paper reviews recent studies on the effect of ownership structure on banking efficiency in the developing countries with the focus on ASEAN countries. Review of previous studies clearly indicates that
types of ownerships did exert some influences towards the performance of the banks in terms of efficiency. Even though publicly-owned banks operated in an economically inefficiency environment, it is undeniable that the existence of publicly-owned banks are needed especially in economically less stable countries. This is because the government-owned banks or the state-owned banks can act as a
catalyst to ensure the development of certain priority sectors that are believed to contribute to the long run economic growth of the countries. Besides that, the
existence of state-owned banks and government-ownership is crucial for the countries to have a balance social and economic objective. In addition, countries need
to encourage the entry for foreign participants into the banking sectors to improve the quality and availability of the financial services towards the domestic financial
market (Levine, 1996). The entry will encourage domestic banks to compete more efficiently in terms of costs and profits in order to survive in this environment. The
spillover effects in terms of technology brought by the foreign participant will enable the creation of a more modern banking environment in the host countries. Not only
that, with a balance combination of state-, privately-, and foreign-owned banks, it is believed that the banking industry in the developing countries will be able to survive
in the competitive environment while helping the government effectively implement the macroeconomics policies in the long run
