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Bank Risk-Taking During COVID-19: The Role of Private and Public Ownership in GCC

Author

Listed:
  • Abdullah Aldousari

    (Department of Accounting and Finance, Aberystwyth University, Aberystwyth SY23 3FL, UK)

  • Ahmed Mohammed

    (Department of Accounting and Finance, Aberystwyth University, Aberystwyth SY23 3FL, UK)

  • Sarah Lindop

    (Department of Accounting and Finance, Aberystwyth University, Aberystwyth SY23 3FL, UK)

Abstract

This study explores the ownership–risk relationship in the GCC emerging economies during the COVID-19 pandemic, examining 44 commercial banks classified as private and publicly owned banks. The two-stage least squares (2SLS) method is employed to identify endogeneity issues, with robustness checks using panel data techniques. We analyzed the ownership–risk relationship, including non-linear and interaction effects. The results reveal that public ownership exhibits an inverted U-shaped relationship with NPLs, where moderate public concentration increases credit risk, while high public control marginally reduces it. Private ownership is linked to higher risk once bank-specific characteristics are controlled, reflecting riskier lending driven by profitability motives. We show that public banks demonstrate resilience due to stable deposits and implicit backing, whereas private banks are more vulnerable to systemic shocks. The impact of ownership structure on credit risk is context-dependent, reflecting heterogeneous ownership objectives in the GCC.

Suggested Citation

  • Abdullah Aldousari & Ahmed Mohammed & Sarah Lindop, 2025. "Bank Risk-Taking During COVID-19: The Role of Private and Public Ownership in GCC," IJFS, MDPI, vol. 13(3), pages 1-15, September.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:3:p:174-:d:1747936
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    References listed on IDEAS

    as
    1. Haque, Faizul & Brown, Kym, 2017. "Bank ownership, regulation and efficiency: Perspectives from the Middle East and North Africa (MENA) Region," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 273-293.
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    3. Alexei Karas & Koen Schoors & Laurent Weill, 2010. "Are private banks more efficient than public banks?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(1), pages 209-244, January.
    4. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
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