Does the ownership structure matter for banks’ capital regulation and risk-taking behavior? Empirical evidence from a developing country

2017 ◽  
Vol 42 ◽  
pp. 404-421 ◽  
Author(s):  
Changjun Zheng ◽  
Syed Moudud-Ul-Huq ◽  
Mohammad Morshedur Rahman ◽  
Badar Nadeem Ashraf
Keyword(s):  
Empirical Evidence ◽  
Developing Country ◽  
Ownership Structure ◽  
Risk Taking ◽  
Capital Regulation ◽  
Risk Taking Behavior

Banks’ capital regulation and risk: Does bank vary in size? Empirical evidence from Bangladesh

2017 ◽  
Vol 04 (02n03) ◽  
pp. 1750025 ◽  
Author(s):  
Changjun Zheng ◽  
Syed Moudud-Ul-Huq
Keyword(s):  
Corporate Governance ◽  
Credit Risk ◽  
Empirical Evidence ◽  
Risk Taking ◽  
Commercial Banks ◽  
Think Tanks ◽  
Capital Regulation ◽  
Level Data ◽  
Risk Taking Behavior ◽  
The Stability

This paper primarily examines both causality effect of banks’ capital regulation and risk-taking behavior based on generalized methods of moment (GMM) for a dynamic unbalanced panel observation of 32 commercial banks in Bangladesh over the period 2000–2014. The empirical findings of this study suggest that capital regulation has a significant effect on risk-taking behavior, and excessive risks impede the growth of capital ratio as well as the stability. Moreover, from bank-level data, size does not uniformly affect the quantity of capital and risk. Large banks have poor capital ratio and higher inclination to risk than small size counterpart. Small size banks are well managed in capital ratio and risk-taking that glitter their stability through the periods. Besides these effects, corporate governance notably influenced banks to reduce credit risk and enhance stability. Finally, this paper provides some implications for the think tanks and stakeholders of the country.

Capital regulation, competition and risk-taking behavior of Indian banks in a simultaneous approach

2018 ◽  
Vol 44 (4) ◽  
pp. 459-477 ◽  
Author(s):  
Santi Gopal Maji ◽  
Preeti Hazarika
Keyword(s):  
Human Capital ◽  
Risk Taking ◽  
Value Added ◽  
Capital Adequacy ◽  
Bank Risk ◽  
Capital Regulation ◽  
Content Type ◽  
Risk Taking Behavior ◽  
Indian Banks ◽  
The Impact

Purpose The purpose of this paper is to investigate the association between capital regulation and risk-taking behavior of Indian banks after incorporating the influence of competition. Further, the study intends to enrich the existing literature by providing empirical evidence on the role of human resources in managing risk along with the influence of other bank specific and macroeconomic variables. Design/methodology/approach Secondary data on 39 listed Indian commercial banks are collected from “Capitaline Plus” corporate data database for a period of 15 years. Capital is measured by capital adequacy ratio as defined by the regulators, and two definitions of risk – credit risk and insolvency risk – are employed. Competition is measured by Herfindahl-Hirschman deposits index, concentration ratio and H-statistic. The value-added intellectual coefficient model is employed to compute human capital efficiency (HCE). Three-stage least squares technique in a simultaneous equation framework is used to estimate the coefficients. Findings The study finds that absolute level of regulatory capital and bank risk are positively associated, although the influence of capital on risk is not statistically significant. The influence of competition on risk is negative for all the models, which supports the “competition stability” view. The impact of human capital on bank risk is also negative for all cases. Practical implications The findings of the study are useful for the decision makers in several ways based on the inverse influence of competition and HCE on bank risk. Further, the observed positive association between capital and risk indicates that the capital regulation is not sufficient to enhance the stability in the banking sector. Originality/value This is the first study in the Indian context that incorporates the competition in the banking industry as an explanatory variable in the extant bank capital and risk relationship.

Capital regulation and ownership structure on bank risk

2019 ◽  
Vol 28 (1) ◽  
pp. 39-56 ◽  
Author(s):  
Aysa Siddika ◽  
Razali Haron
Keyword(s):  
Maximum Likelihood ◽  
Ownership Structure ◽  
Risk Taking ◽  
Commercial Banks ◽  
Dynamic Panel Data ◽  
Bank Risk ◽  
Capital Regulation ◽  
Content Type ◽  
Global Banking ◽  
The Impact

Purpose This paper aims to examine the impact of capital regulation, ownership structure and the degree of ownership concentration on the risk of commercial banks. Design/methodology/approach This study uses a sample of 565 commercial banks from 52 countries over the period of 2011-2015. A dynamic panel data model estimation using the maximum likelihood with structural equation modelling (SEM) was followed considering the panel nature of this study. Findings The study found that the increase of capital ratio decreases bank risk and the regulatory pressure increases the risk-taking of the bank. No statistically significant relationship between banks’ ownership structure and risk-taking was found. The concentration of ownership was found negatively associated with bank risk. Finally, the study found that in the long term, bank increases the capital level that decreases the default risk. Originality/value This study presents an empirical analysis on the global banking system focusing on the Basel Committee member and non-member countries that reflect the implementation of Basel II and Basel III. Therefore, it helps fill the gap in the banking literature on the effect of recent changes in the capital regulation on bank risk. Maximum likelihood with SEM addresses the issue of endogeneity, efficiency and time-invariant variables. Moreover, this study measures the risk by different proxy variables that address total, default and liquidity risks of the banks. Examining from a different perspective of risk makes the study more robust.

scholarly journals Impact of trade openness on bank risk-taking behavior: Evidence from a developing country

2020 ◽  
Vol 8 (1) ◽  
pp. 1765468 ◽  
Author(s):  
Sk Alamgir Hossain ◽  
Syed Moudud-Ul-Huq ◽  
Marufa Binta Kader
Keyword(s):  
Developing Country ◽  
Risk Taking ◽  
Trade Openness ◽  
Bank Risk ◽  
Risk Taking Behavior

Ownership Structure, Capital Regulation and Bank Risk Taking

2012 ◽  
Vol 3 (3) ◽  
pp. 176-188 ◽  
Author(s):  
Nora Azureen Abdul Rahman ◽  
Nor Hayati Ahmad ◽  
Nur Adiana Hiau Abdullah
Keyword(s):  
Ownership Structure ◽  
Risk Taking ◽  
Bank Risk ◽  
Capital Regulation

The Relationship Between Competition and the Fraction of Firms Using Stock-Based Compensation in an Industry

2014 ◽  
Vol 17 (01) ◽  
pp. 1450006
Author(s):  
Hsing-Hua Huang ◽  
Chia-Fan Lin
Keyword(s):  
Empirical Evidence ◽  
Risk Taking ◽  
Market Competition ◽  
Negative Relationship ◽  
Product Market ◽  
Product Market Competition ◽  
Competitive Industry ◽  
Risk Taking Behavior ◽  
The Relationship

This paper theoretically and empirically investigates the relationship between the intensity of product market competition and the fraction of firms that use stock-based compensation in an industry. By employing the relationship between a firm's risk-taking behavior and the use of stock-based compensation, we theoretically show that when the fraction of firms using stock-based compensation is less (more) than one-half, there is a positive (negative) relationship between the fraction and the intensity of product market competition and further provide some supportive empirical evidence. Our results imply that there is more heterogeneity in firms' stock-based compensation policies in the more competitive industry.

Need for Achievement, Education, and Entrepreneurial Risk-Taking Behavior

2012 ◽  
Vol 40 (8) ◽  
pp. 1311-1318 ◽  
Author(s):  
Shouming Chen ◽  
Xuemei Su ◽  
Sibin Wu
Keyword(s):  
Higher Education ◽  
Education Research ◽  
Empirical Evidence ◽  
Risk Taking ◽  
Higher Education Research ◽  
Need For Achievement ◽  
Nascent Entrepreneurs ◽  
The Usa ◽  
Risk Taking Behavior ◽  
Using Data

We examined which factors lead to entrepreneurial risk-taking behavior, using the 2 tests of entrepreneurial behavior theory (desirability and feasibility) to investigate how need for achievement and education interact to influence risk-taking propensity. Using data collected from 230 nascent entrepreneurs in a mid-western state in the USA, we tested 2 hypotheses and found empirical evidence to support the 2 tests theory. The results showed that entrepreneurs with high need for achievement and who had received higher education were more willing to take risks than were entrepreneurs with low need for achievement and who had not received higher education. Research implications and limitations are discussed.

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