Examining the Association between Bank Competition, Regulatory Capital, and Bank Risk-Taking

This paper explores the association between bank competition, regulatory capital, and bank risk taking in an Egyptian setting and to examine the interaction between bank competition and regulatory capital and their impact on bank risk taking in developing countries like Egypt and also investigate the effect of bank characteristics on the relationship between bank competition and bank risk taking through a sample of 27 Egyptian listed banks during the period 2012-2018 using OLS regression . Results indicated that there is a negative impact of bank competition on the bank risk taking and a positive effect of regulatory capital on bank risk taking in the Egyptian listed banks. Results show that increase regulatory play a vertical role in enhance association between competition and bank risk taking and also, there is a positive impact of bank characteristics like: bank size and divarication on bank risk taking in the Egyptian banks. Results refer to there is no effect of bank type, leverage and profitability to support the relationship between bank competition and risk taking

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Corporate governance and risk taking: the role of board gender diversity

Pacific Accounting Review ◽

10.1108/par-03-2017-0021 ◽

2019 ◽

Vol 31 (1) ◽

pp. 19-42 ◽

Cited By ~ 3

Author(s):

Heba Abou-El-Sood

Keyword(s):

Corporate Governance ◽

Risk Taking ◽

Emerging Market ◽

Gender Diversity ◽

Capital Adequacy ◽

Bank Risk ◽

Regulatory Capital ◽

Government Ownership ◽

Content Type ◽

Board Gender Diversity

Purpose This paper aims to investigate the association between board gender diversity and bank risk taking in an emerging market context. Design/methodology/approach The association between female board directorship and bank risk taking is examined, while controlling for board characteristics, managerial, concentrated, family and government ownership. Two-stage regression with instrumental variables is used for a sample of banks listed in Gulf Cooperation Council (GCC) countries during 2002-2014. Findings Results show that banks with more female board directors invest in less risky positions; the association is attenuated when the regulatory capital is larger, providing protection against risky investments, and female directors tend to invest less in risky asset positions in Islamic banks relative to conventional banks. Practical implications The relevance of the findings stems from the recent initiatives undertaken by the Basel Committee to address deficient corporate governance structures that lead to bank breakdowns and the diversified economy of the fast-growing GCC market, relying on banking services in the aftermath of the oil price drop. Originality/value This paper provides novel evidence on the influence of board gender diversity on bank risk taking in an emerging market context. This paper fills a gap in prior research by examining bank-specific regulatory capital adequacy and Islamic banking aspects.

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Bank regulations, bank competition and bank risk-taking: Evidence from Japan

Journal of Multinational Financial Management ◽

10.1016/j.mulfin.2020.100638 ◽

2020 ◽

Vol 56 ◽

pp. 100638

Author(s):

Jittima Tongurai ◽

Chaiporn Vithessonthi

Keyword(s):

Risk Taking ◽

Bank Risk ◽

Bank Competition ◽

Bank Regulations

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The impact of bank competition and concentration on bank risk-taking behavior and stability: Evidence from GCC countries

The North American Journal of Economics and Finance ◽

10.1016/j.najef.2018.10.015 ◽

2020 ◽

Vol 51 ◽

pp. 100867 ◽

Cited By ~ 2

Author(s):

Abdulazeez Y.H. Saif-Alyousfi ◽

Asish Saha ◽

Rohani Md-Rus

Keyword(s):

Risk Taking ◽

Bank Risk ◽

Bank Competition ◽

Gcc Countries ◽

Risk Taking Behavior ◽

The Impact

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Competition and Financial Stability in the European Listed Banks

SAGE Open ◽

10.1177/21582440211032645 ◽

2021 ◽

Vol 11 (3) ◽

pp. 215824402110326

Author(s):

Maria Celia López-Penabad ◽

Ana Iglesias-Casal ◽

José Fernando Silva Neto

Keyword(s):

Market Power ◽

Risk Taking ◽

Financial Stability ◽

Banking System ◽

Political Community ◽

Bank Risk ◽

Bank Competition ◽

Banking Competition ◽

The Impact ◽

The Relationship

The analysis of the relationship between bank competition and financial stability remains a controversial issue and widely discussed in the academic and political community. Using a sample of 117 listed banks in 16 European countries for the years 2011 to 2018, the article explores the impact of market power, measured by the Lerner index, on the bank stability, measured by distance-to-default and Z score. Our results show that for the overall sample, higher market power in banking decreases the risky behavior of banks, confirming the “competition-fragility” view. We do not find any support for a U-shaped relationship between competition and bank risk-taking. However, our findings differ from previous studies pointing out that the relationship between bank competition and risk-taking is differentiated depending on whether the bank is based in a country with a more stable banking system or a less stable one. In countries with a less financially stable banking system, increased competition leads to increased bank risk-taking. In countries with a more stable banking system, market power seems not to influence banks’ financial stability. Public policies must guarantee banking competition but limiting excessive bank risk-taking, especially in countries with less financially sound banking systems. The consolidation of European banking can be a key element for achieving these policies.

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