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Ownership structure and risk-taking behaviour in conventional and Islamic banks: Evidence for MENA countries

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  • Samir Srairi

Abstract

This paper investigates the impact of ownership structure, measured by two dimensions: nature of owners and ownership concentration, on bank risk, controlling for country and bank specific traits and other bank regulations. Particularly, it compares risk-taking behaviour of conventional and Islamic banks in 10 MENA countries under three types of bank ownership (family-owned, company-owned and state-owned banks) over the period 2005e2009. The result shows a negative association between ownership concentration and risk. We also find that different categories of shareholders have different risk attitudes. Family-owned banks have incentives to take less risk. State-owned banks display higher risk and have significantly greater proportions of non-performing loans than other banks. By comparing conventional and Islamic banks, the empirical findings show that private Islamic banks are as stable as private conventional banks. However, Islamic banks have a lower exposure to credit risk than conventional ban s. attention...

Suggested Citation

  • Samir Srairi, 2013. "Ownership structure and risk-taking behaviour in conventional and Islamic banks: Evidence for MENA countries," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 13(4), pages 115-127, December.
    • Handle: RePEc:bor:bistre:v:13:y:2013:i:4:p:115-127
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    Keywords

    Commercial banks; Ownership structure; Bank risk-taking; Islamic banks; MENA countries;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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