Banking Governance and Risk: The Case of Tunisian Conventional Banks

• Authors: Houssem Rachdi , Mohamed Ali Trabelsi , Naama Trad
• Languages of publication: EN

Abstracts

EN

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

EN

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

• Publisher: Sciendo
• Journal: Review of Economic Perspectives
• Year: 2013
• Volume: 13
• Issue: 4
• Pages: 195-206

Dates

published

2013-12-01

online

2014-01-25

Contributors

author

Houssem Rachdi

• Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Tunisia

author

Mohamed Ali Trabelsi

• High Business School of Tunis, University of Manouba, Tunisia

author

Naama Trad

• High Business School of Tunis, University of Manouba, Tunisia

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Identifiers

DOI

10.2478/revecp-2013-0009