Jump to ContentJump to Main Navigation
Show Summary Details
In This Section

Review of Economic Perspectives

Národohospodárský obzor; The Journal of Masaryk University

4 Issues per year


SCImago Journal Rank (SJR) 2015: 0.143
Source Normalized Impact per Paper (SNIP) 2015: 0.273
Impact per Publication (IPP) 2015: 0.121

Open Access
Online
ISSN
1804-1663
See all formats and pricing
In This Section
Volume 13, Issue 4 (Dec 2013)

Issues

Banking Governance and Risk: The Case of Tunisian Conventional Banks

Houssem Rachdi
  • Corresponding author
  • Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Tunisia
  • Email:
/ Mohamed Ali Trabelsi
  • Corresponding author
  • High Business School of Tunis, University of Manouba, Tunisia
  • Email:
/ Naama Trad
  • Corresponding author
  • High Business School of Tunis, University of Manouba, Tunisia
  • Email:
Published Online: 2014-01-25 | DOI: https://doi.org/10.2478/revecp-2013-0009

Abstract

Banks are in the business of taking risks. The 3 pillars of Basel II capital accord highlight the crucial role of informative risk disclosures in enhancing market discipline. The specific role and responsibilities of the board of directors or supervisory boards in banking institutions continue, however, to fuel debate. Findings of the literature are often inconclusive. The main contribution of this study is examining how board characteristics affect risk in banking industry. We explore this relationship by using many econometric approaches. The empirical analysis based on a sample of 11 Tunisian conventional banks over the period 2001-2011 reports the following results when using GLS RE: small and dual functions boards are associated with more insolvency risk but have no significant effect on credit and global risks. The presence of independent directors within the board generates an increase in global risk but has no significant effect on insolvency and credit risks. A lower CEO ownership has no significant effect with all measures of risks. Finally, banking capitalization is associated with more insolvency risk, and small size banks assume lower credit risk. These findings are performed by using a GMM in system approach

Keywords : Board characteristics; Bank risk; Governance; GLS RE; GMM system

  • ADAMS R.B. MEHRAN H., (2003). Board Structure, Banking Firm Performance and The Bank Holding Company Organizational Form, Federal Reserve Bank of Chicago Proceedings, pp. 408-422.

  • ADAMS, R.B. MEHRAN, H., (2008). Corporate performance, board structure and their determinants in the banking industry. Working Paper, Federal Reserve Bank of New York.

  • ANDRES P.D. VALLELADO, E., (2008). Corporate Governance in Banking: The Role of the Board of directors, Journal of Banking and Finance, pp. 4-32.

  • BALTAGI, B.H. WU, P.X., (1999). Unequally spaced panel data regressions with AR(1) disturbances. Econometric Theory 15, pp. 814-823.

  • BASEL COMMITTEE ON BANKING SUPERVISION (2006). Enhancing Corporate Governance for Banking Organizations.

  • BECHT, M. BOLTON, P. ROELL, A. (2011). Why bank governance is different. Oxford Review of Economic Policy, 27, pp. 437-463. DOI: 10.1093/oxrep/grr024 [Web of Science] [Crossref]

  • BECK T., LEVINE R. LOAYZA N., (2000). Financial Intermediation and Growth: Causality and Causes, Journal of Monetary Economics, 46(1), pp. 31-77. DOI: 10.1016/S0304-3932(00)00017-9 [Crossref]

  • BEN KHEDIRI K., ( 2006). Gouvernance d’Entreprise et Couverture des Risques Financiers: étude empirique sur les entreprises Françaises, CIME, IAE de Caen, pp. 1-26.

  • BERLE A.A. MEANS G.C., (1932). The Modern Corporation and Private Property, MacMillan Company, New York.

  • BLANCHARD D., DIONNE G., (2003). Risk Management and Corporate Governance, Working Paper, pp. 3-4

  • BLISS M.A., MUNIANDY B. MAJID A., (2007). CEO Duality, Audit Committee Effectiveness and Audit Risks, Managerial Auditing Journal, 22 (7), pp. 716-728.

  • BORISOVA G., BROCKMAN P., JESUS M.S., ZAGORCHEV A., (2012).Government Ownership and Corporate Governance: Evidence from the EU, Journal of Banking and Finance, pp. 1-18.

  • BOUAISS K, (2008). Réglementation du comité de Bâle, prise de risque et performance des banques européennes. Revue Banque et Marchés, 95, pp. 6-14.

  • BROKOVISH K.A., BRUNARSKI K.R., CRUTCHLEY C.E SIMKINS B.J., (2004).Board Composition Corporate Use of the Interest Rate Derivatives, Journal of financial Research, 2(2), pp. 199-216.

  • CAPRIO G., LAEVEN L. LEVINE R., (2007). Governance and Banks Valuations, Journal of Financial Intermediation, 16, pp. 584-617. DOI: 10.1016/j.jfi.2006.10.003 [Crossref]

  • CHIA-LING HO., (2011). Board Composition, Risk Management and Corporate Performance in the Taiwanese Life Insurance Industry, Journal of Risk and Insurance, 8(4), pp. 7-27.

  • DAHYA, J., DIMITROV, O. MCCONNELL, J. J., (2008). Dominant shareholders, corporate boards, and corporate value: A cross-country analysis, Journal of Financial Economics, 87 (1), pp. 73-100. DOI: 10.1016/j.jfineco.2006.10.005 [Crossref] [Web of Science]

  • DAILY C.M, DALTON D.R., (1993). Board of directors Leadership and Structure: Control and Performance Implications, Entrepreneurship Theory and Practice, 17, pp. 65-81.

  • DANNON P.H., (2009). Mecanismes Internes de Gouvernance Bancaire et Risques Financiers dans la Zone UEMOA: uneanalyse économetrique par les données de panel, http:/ead.univ-angers.fr,pp. 1-29.

  • DIONNE G., TRIKI T., (2005). Risk Management and Corporate Governance: The Importance of Independence and Financial Knowledge for the Board and the Audit Committee, HEC Montreal Working Paper No. 05-03. Available at SSRN: http://ssrn.com/abstract=730743.

  • FAMA E. JENSEN M., (1983). Separation of Ownership and Control, Journal of Law and Economics, 26, pp. 301-325. DOI: 10.1086/467037 [Crossref]

  • HASAN, I., WACHTEL, P. ZHOU, M., (2009). Institutional development, financial deepening and economic growth: Evidence from China, Journal of Banking and Finance, 33, pp. 57-170

  • JENSEN M.C., MECKLING W.H., (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure, Journal of Financial Economics, l3, pp. 305-360.

  • JENSEN, M.C., (1993). The Modern Industrial Revolution, Exit and the Failure of Internal Control Systems, Journal of Finance, 48, pp. 831-880. DOI: 10.1111/j.1540-6261.1993.tb04022.x [Crossref]

  • JEZZINI M., (2005).Revuedelalittérature:risqueopérationnel, http://www.ressourcesactuarielles.net, pp. 7-11.

  • LEFORT, F. URZÚA, F., (2008). Board independence, firm performance and ownership concentration: Evidence from Chile, Journal of Business Research, 61, pp. 615-622. DOI: 10.1016/j.jbusres.2007.06.036 [Web of Science] [Crossref]

  • LIN Y, WEN M.M YU J., (2010). Enterprise Risk Management: Strategic Antecedents, Risk Integration and Performance, SSRN, Working Paper.

  • LINCK, J.S, NETTER, J.M. YANG, T., (2008). The determinants of board structure, Journal of Financial Economics, 87, pp. 308-328. DOI: 10.1016/j.jfineco.2007.03.004 [Web of Science] [Crossref]

  • LIPTON M. LORSCH, J., (1992). A Modest Proposal for Improved Corporate Governance, Business Lawyer, 59, pp. 59-77.

  • MAMOGHLI C. DHOUIBI R., ( 2009). Bank Corporate Governance and Insolvency Risk: evidence from an emerging market, http://ssrn.com/abstract=1391878, pp. 1-28.

  • MANIÈRE O., (2012). The Board of directors and Banking Risk, Letter AFGE, 29, pp. 5-31.

  • PATHAN S., (2009). Strong Boards, CEO Power and Bank Risk-taking, Journal of Banking and Finance, pp. 1-22. [Web of Science]

  • RACHDI H. GHAZOUANI B., (2011). Board Characteristics, Performance and Risktaking Behaviour in Tunisian Banks, International Journal of Business and Management, 6(6), pp. 88-97.

  • SALLOUM C. AZOURY N., ( 2008). Détresse Financière et Gouvernance d’Entreprise : Approche Empirique, Revue Libanaise de Gestionet d’Economie,1, pp. 6-43.

  • TRABELSI M.A., (2010). Governance and Performance of Tunisian Banks, International Journal of Economics and Finance, 2(3), pp.189-198. [Web of Science]

  • TRABELSI M.A., (2011). The Impact of the Financial Crisis on the Global Economy: Can the Islamic Financial System Help?, Journal of Risk Finance, 12(1), pp. 15-25.DOI: 10.1108/15265941111100049 [Crossref]

  • WILLIAMSON O., (1963). Managerial Discretion and Business Behavior, American Economic Review, 93, pp. 1032-1057.

  • WINTOKI M.B., LINCK J.S., NETTER J.M., (2012). Endogeneity and the dynamics of internal corporate governance, Journal of Financial Economics, 105, pp. 581-606. DOI: 10.1016/j.jfineco.2012.03.005 [Crossref]

  • WURGLER J., (2000).Financial Markets and the Allocation of Capital, Journal of Financial Economics, 58, 1-2, pp. 187-214. [Crossref]

About the article

Published Online: 2014-01-25

Published in Print: 2013-12-01



Citation Information: Review of Economic Perspectives, ISSN (Online) 1804-1663, ISSN (Print) 1213-2446, DOI: https://doi.org/10.2478/revecp-2013-0009. Export Citation

This content is open access.

Comments (0)

Please log in or register to comment.
Log in