Corporate governance, regulation and risk-taking behaviour in the banking industry: the Tunisian evidence
AbstractThis paper analyses empirically the determinants of risk-taking in Tunisian commercial banks, with special emphasis on the ownership structure, the acceptance of government officials on bank's boards, the capital adequacy requirements and the franchise value. The sample used comprised ten commercial banks for the period from 1997 to 2006. In 1999, the Central Bank of Tunisia increased the minimum capital requirements for the banking industry vis-a-vis risk-weighted assets to 8%, along the lines proposed by the Basel Committee on Banking Supervision. We find that the key component of Basel I-capital adequacy requirements does not affect bank risk-taking. The acceptance of government officials on banks' boards reduces bank risk. The relationship between the managerial holdings and total and firm specific risk is non-linear; the risk increases initially with the ownership by managers, and then decreases as the effect of managerial entrenchment dominates the effects of interest alignment on bank risk. In contrast, systematic risk was unrelated to ownership. The franchise value does not affect bank risk. Finally, robustness tests examining the shareholder monitoring hypothesis and the substitution hypothesis yield results inconsistent with the argument that regulation (an external governance mechanism) and shareholder monitoring (an internal governance mechanism) are substitutes for one another.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Inderscience Enterprises Ltd in its journal Int. J. of Accounting, Auditing and Performance Evaluation.
Volume (Year): 6 (2010)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.inderscience.com/browse/index.php?journalID=41
commercial banks; corporate governance; capital regulation; ownership structure; managerial holdings; corporate control; government officials; franchise value; panel data; Tunisia; risk taking behaviour; banking industry; capital adequacy; shareholder monitoring; substitution.;
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Graham Langley) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.