The Federal Home Loan Banks and Commercial Bank Risk Taking: An Overstated Moral Hazard?

2008 ◽  
Author(s):  
Jonathan A. Scott ◽  
Scott E. Hein
Keyword(s):  
Moral Hazard ◽  
Commercial Bank ◽  
Risk Taking ◽  
Bank Risk ◽  
Federal Home Loan Banks

Moral hazard and risk-taking incentives in Islamic banks, does franchise value matter!

2017 ◽  
Vol 10 (1) ◽  
pp. 42-59 ◽  
Author(s):  
Mehdi Mili ◽  
Sami Abid
Keyword(s):  
Moral Hazard ◽  
Risk Taking ◽  
Bank Risk ◽  
Islamic Banks ◽  
Total Risk ◽  
Empirical Examination ◽  
Content Type ◽  
Islamic Bank ◽  
Franchise Value ◽  
The Impact

Purpose This paper aims to examine risk-taking in Islamic banks by exploring moral hazard and owner/manager agency problems simultaneously. Design/methodology/approach The authors propose to estimate a model of bank risk-taking that includes both franchise value and ownership structure as explanatory factors of bank risk. Findings The results show that franchise value is an important determinant of Islamic bank risk-taking. Banks with high franchise values are less likely to take risks than banks with low franchise value. In contrast, outside block holders have, at best, limited influences on bank risk-taking. Originality/value This paper conducts the first empirical examination of the relationship between managerial risk preferences and Islamic banks ownership. The authors examine simultaneously the effect of franchise value and owner/manager problem on Islamic bank risk taking behavior. They consider separately the impact on total risk, systematic risk and bank specific risk.

The impact of contingent liability on commercial bank risk taking

1998 ◽  
Vol 47 (2) ◽  
pp. 189-218 ◽  
Author(s):  
Benjamin C. Esty
Keyword(s):  
Commercial Bank ◽  
Risk Taking ◽  
Bank Risk ◽  
Contingent Liability ◽  
The Impact

Factors Affecting Bank Risk-Taking: Evidence from Southeast Asian Countries

2016 ◽  
Vol 23 (2) ◽  
pp. 120-136
Author(s):  
NGUYEN THANH LIEM ◽  
TRAN HUNG SON ◽  
HOANG TRUNG NGHIA
Keyword(s):  
Risk Taking ◽  
Southeast Asian ◽  
Bank Risk ◽  
Asian Countries ◽  
Factors Affecting ◽  
Southeast Asian Countries

Asset Securitization and Bank Risk Taking

2011 ◽  
Author(s):  
Lai Van Vo ◽  
Huong Thi Thu Le
Keyword(s):  
Risk Taking ◽  
Bank Risk ◽  
Asset Securitization

Bank Risk-Taking and the Lender of Last Resort

2012 ◽  
Author(s):  
Mark Mink
Keyword(s):  
Risk Taking ◽  
Bank Risk ◽  
Lender Of Last Resort

Does a Larger Menu Increase Appetite? Collateral Eligibility and Bank Risk-Taking

2015 ◽  
Author(s):  
Sjoerd van Bekkum ◽  
Marc Gabarro ◽  
Rustom M. Irani
Keyword(s):  
Risk Taking ◽  
Bank Risk

Internal Control Quality and Bank Risk-Taking and Performance

2020 ◽  
Author(s):  
Matthew Baugh ◽  
Matthew Ege ◽  
Christopher G. Yust
Keyword(s):  
Internal Control ◽  
Risk Taking ◽  
Downside Risk ◽  
Internal Controls ◽  
Bank Risk ◽  
Material Weakness ◽  
Control Quality ◽  
Interest Income ◽  
Upside Risk ◽  
And Performance

Using a sample of bank-years from 2005 to 2017, we examine the effect of internal control quality on future risk-taking and performance. We find that banks that disclose a material weakness in internal controls have higher risk-taking and worse performance in the future, including having a higher (lower) likelihood of experiencing large losses (gains). These findings suggest that weak controls increase (reduce) downside (upside) risk-taking or conversely that strong controls increase (reduce) upside (downside) risk-taking. Path analyses suggest that 22.3 to 43.7 percent of the effect of internal control quality on future performance is through risk-taking. Additionally, material weaknesses are negatively associated with total asset, loan, interest income, and non-interest income growth, suggesting that internal control quality affects both core and non-core activities of banks. Overall, results suggest that strong internal controls improve bank risk-taking, in part through asymmetrically reducing downside risk-taking while facilitating upside risk-taking, ultimately improving bank performance.

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