IDEAS home Printed from https://ideas.repec.org/a/rbs/ijfbss/v3y2014i1p186-200.html
   My bibliography  Save this article

Risk Management, Board Characteristics and Performance in the Tunisian Lending Institutions

Author

Listed:
  • Ahmed Zemzem

    (University of Sousse, Sahloul III PO box 40, Sousse 4054, Tunisia)

  • Oumeima Kacem

    (University of Sousse, Sahloul III PO box 40, Sousse 4054, Tunisia)

Abstract

The aim of our research is to investigate the relationship between risk management, corporate governance and performance in lendinginstitutions. Mainly, this research seeks to examine the effect of risk management and some board’s featureson financial performance. Empirical analyses are conducted from a sample of 17Tunisian lendinginstitutions over the period 2002-2011 using an OLS regression. The study shows that board size affect performance significantly. Most importantly, the existence of a risk committee within the institution has a negative and significant effect on performance.

Suggested Citation

  • Ahmed Zemzem & Oumeima Kacem, 2014. "Risk Management, Board Characteristics and Performance in the Tunisian Lending Institutions," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 3(1), pages 186-200, January.
    • Handle: RePEc:rbs:ijfbss:v:3:y:2014:i:1:p:186-200
    as

    Download full text from publisher

    File URL: https://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/411/414
    Download Restriction: no
    File URL: https://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/411
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert Carty & Gail Weiss, 2012. "Does CEO duality affect corporate performance? Evidence from the US banking crisis," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 20(1), pages 26-40, February.
    2. Athanasoglou, Panayiotis P. & Brissimis, Sophocles N. & Delis, Matthaios D., 2008. "Bank-specific, industry-specific and macroeconomic determinants of bank profitability," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(2), pages 121-136, April.
    3. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    4. Kevin Campbell & Antonio Mínguez-Vera, 2008. "Gender Diversity in the Boardroom and Firm Financial Performance," Journal of Business Ethics, Springer, vol. 83(3), pages 435-451, December.
    5. Minton, Bernadette & Taillard, Jerome P. A. & Williamson, Rohan, 2010. "Do Independence and Financial Expertise of the Board Matter for Risk Taking and Performance?," Working Paper Series 2010-14, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    6. Laeven, Luc & Levine, Ross, 2009. "Bank governance, regulation and risk taking," Journal of Financial Economics, Elsevier, vol. 93(2), pages 259-275, August.
    7. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    8. Emilia Peni & Sami Vähämaa, 2012. "Did Good Corporate Governance Improve Bank Performance during the Financial Crisis?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 41(1), pages 19-35, April.
    9. Guest, Paul M., 2008. "The determinants of board size and composition: Evidence from the UK," Journal of Corporate Finance, Elsevier, vol. 14(1), pages 51-72, February.
    10. Erkens, David H. & Hung, Mingyi & Matos, Pedro, 2012. "Corporate governance in the 2007–2008 financial crisis: Evidence from financial institutions worldwide," Journal of Corporate Finance, Elsevier, vol. 18(2), pages 389-411.
    11. Caprio, Gerard & Laeven, Luc & Levine, Ross, 2007. "Governance and bank valuation," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 584-617, October.
    12. John E. Core & Wayne R. Guay & Tjomme O. Rusticus, 2006. "Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations," Journal of Finance, American Finance Association, vol. 61(2), pages 655-687, April.
    13. Pathan, Shams & Faff, Robert, 2013. "Does board structure in banks really affect their performance?," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1573-1589.
    14. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January.
    15. Trabelsi, Mohamed Ali, 2009. "Governance and performance of Tunisian banks," MPRA Paper 76918, University Library of Munich, Germany, revised 2009.
    16. Aebi, Vincent & Sabato, Gabriele & Schmid, Markus, 2012. "Risk management, corporate governance, and bank performance in the financial crisis," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3213-3226.
    17. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    18. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    19. Cornett, Marcia Millon & McNutt, Jamie John & Tehranian, Hassan, 2009. "Corporate governance and earnings management at large U.S. bank holding companies," Journal of Corporate Finance, Elsevier, vol. 15(4), pages 412-430, September.
    20. Anderson, Ronald C. & Fraser, Donald R., 2000. "Corporate control, bank risk taking, and the health of the banking industry," Journal of Banking & Finance, Elsevier, vol. 24(8), pages 1383-1398, August.
    21. Winfried Ruigrok & Simon I. Peck & Hansueli Keller, 2006. "Board Characteristics and Involvement in Strategic Decision Making: Evidence from Swiss Companies," Journal of Management Studies, Wiley Blackwell, vol. 43(5), pages 1201-1226, July.
    22. Beltratti, Andrea & Stulz, René M., 2012. "The credit crisis around the globe: Why did some banks perform better?," Journal of Financial Economics, Elsevier, vol. 105(1), pages 1-17.
    23. Goyal, Vidhan K. & Park, Chul W., 2002. "Board leadership structure and CEO turnover," Journal of Corporate Finance, Elsevier, vol. 8(1), pages 49-66, January.
    24. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
    25. Slemrod, Joel, 2004. "The Economics of Corporate Tax Selfishness," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(4), pages 877-899, December.
    26. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    27. Pi, Lynn & Timme, Stephen G., 1993. "Corporate control and bank efficiency," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 515-530, April.
    28. Bhagat, Sanjai & Bolton, Brian, 2008. "Corporate governance and firm performance," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 257-273, June.
    29. Helen Kang & Mandy Cheng & Sidney J. Gray, 2007. "Corporate Governance and Board Composition: diversity and independence of Australian boards," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 194-207, March.
    30. Niclas L. Erhardt & James D. Werbel & Charles B. Shrader, 2003. "Board of Director Diversity and Firm Financial Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(2), pages 102-111, April.
    31. Gérard Charreaux & Philippe Desbrières, 1997. "Le point sur le gouvernement des entreprises," Working Papers CREGO 0970701, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    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. Masturah Malik & Rohami Shafie & Ku Nor Izah Ku Ismail, 2021. "Do risk management committee characteristics influence the market value of firms?," Risk Management, Palgrave Macmillan, vol. 23(1), pages 172-191, June.
    2. Firas Farhan Jedi & Sabri Nayan, 2018. "An empirical evidence on the effect of women board representation on firm performance of companies listed in Iraq Stock Exchange," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(1), pages 117-131, January.
    3. Emilia Klepczarek, 2017. "The importance of the board of directors. Lessons from Lehman's failure," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 16(1), pages 59-73, March.
    4. Olayinka Adedayo Erin & Adebola Daniel Kolawole & Abdurafiu Olaiya Noah, 2020. "Risk governance and cybercrime: the hierarchical regression approach," Future Business Journal, Springer, vol. 6(1), pages 1-15, December.
    5. Mona A. ElBannan & Mohamed A. ElBannan, 2014. "Corporate Governance and Accounting Performance: A Balanced Scorecard Approach," Accounting and Finance Research, Sciedu Press, vol. 3(2), pages 1-60, May.

    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. Oumeima Kacem & Sana El Harbi, 2022. "Do risk governance and effective board affect bank performance? Evidence from large banks worldwide," Risk Management, Palgrave Macmillan, vol. 24(4), pages 461-483, December.
    2. Catarina Fernandes & Jorge Farinha & Francisco Vitorino Martins & Cesario Mateus, 2018. "Bank governance and performance: a survey of the literature," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(3), pages 236-256, July.
    3. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, June.
    4. Dong, Yizhe & Girardone, Claudia & Kuo, Jing-Ming, 2017. "Governance, efficiency and risk taking in Chinese banking," The British Accounting Review, Elsevier, vol. 49(2), pages 211-229.
    5. mamatzakis, em, 2014. "The effect of corporate governance on the performance of US investment banks," MPRA Paper 60198, University Library of Munich, Germany.
    6. Ghosh, Saibal, 2017. "Why is it a man’s world, after all? Women on bank boards in India," Economic Systems, Elsevier, vol. 41(1), pages 109-121.
    7. Bowo Setiyono & Amine Tarazi, 2018. "Does Diversity of Bank Board Members Affect Performance and Risk? Evidence from an Emerging Market," CSR, Sustainability, Ethics & Governance, in: Belén Díaz Díaz & Samuel O. Idowu & Philip Molyneux (ed.), Corporate Governance in Banking and Investor Protection, chapter 0, pages 185-218, Springer.
    8. Cardillo, Giovanni & Onali, Enrico & Torluccio, Giuseppe, 2021. "Does gender diversity on banks' boards matter? Evidence from public bailouts," Journal of Corporate Finance, Elsevier, vol. 71(C).
    9. Mohamed Marie & Hany Kamel & Israa Elbendary, 2021. "How does internal governance affect banks’ financial stability? Empirical evidence from Egypt," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(3), pages 240-255, September.
    10. Zhou, Yifan & Kara, Alper & Molyneux, Philip, 2019. "Chair-CEO generation gap and bank risk-taking," The British Accounting Review, Elsevier, vol. 51(4), pages 352-372.
    11. Mavrakana, Christina & Psillaki, Maria, 2019. "Do board structure and compensation matter for bank stability and bank performance? Evidence from European banks," MPRA Paper 95776, University Library of Munich, Germany.
    12. Catarina Fernandes & Jorge Farinha & Francisco Vitorino Martins & Cesario Mateus, 2017. "Supervisory boards, financial crisis and bank performance: do board characteristics matter?," Journal of Banking Regulation, Palgrave Macmillan, vol. 18(4), pages 310-337, November.
    13. Liang, Qi & Xu, Pisun & Jiraporn, Pornsit, 2013. "Board characteristics and Chinese bank performance," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2953-2968.
    14. Walter Gontarek & Yacine Belghitar, 2021. "CEO chairman controversy: evidence from the post financial crisis period," Review of Quantitative Finance and Accounting, Springer, vol. 56(2), pages 675-713, February.
    15. Luca Bellardini & Pierluigi Murro & Daniele Previtali, 2019. "The Risk Weighted Ownership Index: an ex-ante measure of banks' risk and performance," Working Papers CASMEF 1904, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    16. Shkendije Himaj, 2014. "Corporate Governance in Banks and its Impact on Risk and Performance: Review of Literature on the Selected Governance Mechanisms," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 3(3), pages 53-85.
    17. Renata Karkowska & Jan Acedański, 2020. "The effect of corporate board attributes on bank stability," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 19(2), pages 99-137, May.
    18. Mollah, Sabur & Skully, Michael & Liljeblom, Eva, 2021. "Strong Boards and Risk-taking in Islamic Banks," Review of Corporate Finance, now publishers, vol. 1(1-2), pages 135-180, April.
    19. Battaglia, Francesca & Gallo, Angela, 2017. "Strong boards, ownership concentration and EU banks’ systemic risk-taking: Evidence from the financial crisis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 128-146.
    20. Farag, Hisham & Mallin, Chris, 2017. "Board diversity and financial fragility: Evidence from European banks," International Review of Financial Analysis, Elsevier, vol. 49(C), pages 98-112.

    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:rbs:ijfbss:v:3:y:2014:i:1:p:186-200. 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: Hasan Dincer (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    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.