Corporate governance, regulation and risk-taking behaviour in the banking industry: the Tunisian evidence
This 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.
If 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.
Volume (Year): 6 (2010)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www.inderscience.com/browse/index.php?journalID=41|
When requesting a correction, please mention this item's handle: RePEc:ids:ijaape:v:6:y:2010:i:4:p:422-450. See general 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: (Darren Simpson)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.