IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v43y2011i12p1551-1564.html
   My bibliography  Save this article

Bank's risk-taking and ownership structure - evidence for economics in transition stage

Author

Listed:
  • Shuching Chou
  • Fengyi Lin

Abstract

Conventional studies assume that inside management plays a major role in corporate governance and argue that foreign institutional investors may lack incentives to monitor invested firms due to their short-term profit orientation. By utilizing 650 observations of Taiwan banks, this study examines the effects of specific types of ownership on the risk-taking behaviours of banks under differential ownership structures. In light of the increasing foreign institution ownership during privatization, this article further constructs relative governance strength variables to observe how inside management and foreign institutions interact to affect these banks' risk-taking. The results show that banks with higher inside management ownership and higher government ownership have higher overdue loan and lower capital adequacy ratios. Banks with higher foreign institution ownership and stronger relative governance strength are associated with lower overdue loans and higher regulatory capital. In general, the results are consistent regardless of the choice of ownership structure or relative governance strength of foreign institutions as independent variable. These findings contribute to add evidence for risk-taking behaviour manifested by banks in the emerging market, where feasible monitoring mechanisms still need to be explored.

Suggested Citation

  • Shuching Chou & Fengyi Lin, 2011. "Bank's risk-taking and ownership structure - evidence for economics in transition stage," Applied Economics, Taylor & Francis Journals, vol. 43(12), pages 1551-1564.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:12:p:1551-1564
    DOI: 10.1080/00036840903018791
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840903018791
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036840903018791?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ebrahim, Alnoor & Herz, Steve, 2007. "Accountability in Complex Organizations: World Bank Responses to Civil Society," Working Paper Series rwp07-060, Harvard University, John F. Kennedy School of Government.
    2. Alnoor Ebrahim & Steve Herz, 2007. "Accountability in Complex Organizations: World Bank Responses to Civil Society," Harvard Business School Working Papers 08-027, Harvard Business School.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muhammad Sajjad Hussain & Muhammad Muhaizam Bin Musa Musa & Abdelnaser Omran Ali, 2018. "The Impact of Private Ownership Structure on Risk Taking by Pakistani Banks: An Empirical Study AbstractThe financial crisis of 2007-09 was converted the focus of researchers and regulators toward ban," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(3), pages :325-337, September.
    2. Hussein A. Hassan Al-Tamimi & Neila Jellali, 2013. "The Effects of Ownership Structure and Competition on Risk-Taking Behavior: Evidence from UAE Conventional and Islamic Banks," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 7(2), pages 115-124.
    3. Ashraf, Dawood & Ramady, Mohamed & Albinali, Khalid, 2016. "Financial fragility of banks, ownership structure and income diversification: Empirical evidence from the GCC region," Research in International Business and Finance, Elsevier, vol. 38(C), pages 56-68.
    4. Khoa Dang Duong & Ai Nhan Ngoc Le & Diep Van Nguyen & Hoa Thanh Phan Le, 2023. "Impact of Ownership Structure and Business Diversifications on the Risk-Taking Behaviors of Insurance Companies in Vietnam," SAGE Open, , vol. 13(3), pages 21582440231, August.
    5. Marc Kouzez, 2021. "Foreign ownership and bank performance Evidence from French market," Economics Bulletin, AccessEcon, vol. 41(2), pages 834-847.
    6. Shaban, Mohamed & James, Gregory A., 2018. "The effects of ownership change on bank performance and risk exposure: Evidence from indonesia," Journal of Banking & Finance, Elsevier, vol. 88(C), pages 483-497.
    7. Ali, Abdelrahman Elzahi Saaid, 2016. "Poverty Alleviation through Microfinance in North-East Kenya Province," Working Papers 2016-9, The Islamic Research and Teaching Institute (IRTI).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arjan de Haan & Ward Warmerdam, 2012. "The politics of aid revisited: a review of evidence on state capacity and elite commitment," Global Development Institute Working Paper Series esid-007-12, GDI, The University of Manchester.
    2. Shuching Chou & Tze-Yu Yen & Yen-Hui Kuo, 2011. "Internet Information Relevance of Financial Institutions: Evidence from Taiwan," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 647-670.
    3. Eastwood Lauren E, 2011. "Resisting Dispossession: Indigenous Peoples, the World Bank and the Contested Terrain of Policy," New Global Studies, De Gruyter, vol. 5(1), pages 1-33, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:43:y:2011:i:12:p:1551-1564. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.