TY - JOUR
T1 - How do board and ownership characteristics affect bank risk-taking? New evidence from sub-Saharan Africa
AU - Adu, Douglas A.
N1 - Publisher Copyright:
© The Author(s), under exclusive licence to Springer Nature Limited 2023.
PY - 2024/9
Y1 - 2024/9
N2 - The study examines the impact of board attributes, ownership structures and other bank-specific factors on bank risk-taking. Using a sample of 220 banks in 16 sub-Saharan Africa countries for the years 2007–2018, the findings of the study are fourfold. First, the findings indicate that independent directors who are financial experts reduce bank risk-taking. Second, the study finds that the number of board meetings has a negative impact on bank risk-taking. Third, the estimation results suggest that government and foreign ownership encourage banks to take more risks. Finally, the study observes that institutional shareholder ownership influence bank risk-taking negatively. We observe that an increase in the ownership stake held by long-term institutional investors is associated with a decrease in risk-taking. Furthermore, we show that the predicted relationships vary across different periods. The findings are robust to different types of endogeneities and alternative measures of bank risk-taking. The study concludes that different corporate governance characteristics have different implications for banks' risk-taking in the region. The findings have key policy implications for banking practitioners, regulators, and policy makers in the region.
AB - The study examines the impact of board attributes, ownership structures and other bank-specific factors on bank risk-taking. Using a sample of 220 banks in 16 sub-Saharan Africa countries for the years 2007–2018, the findings of the study are fourfold. First, the findings indicate that independent directors who are financial experts reduce bank risk-taking. Second, the study finds that the number of board meetings has a negative impact on bank risk-taking. Third, the estimation results suggest that government and foreign ownership encourage banks to take more risks. Finally, the study observes that institutional shareholder ownership influence bank risk-taking negatively. We observe that an increase in the ownership stake held by long-term institutional investors is associated with a decrease in risk-taking. Furthermore, we show that the predicted relationships vary across different periods. The findings are robust to different types of endogeneities and alternative measures of bank risk-taking. The study concludes that different corporate governance characteristics have different implications for banks' risk-taking in the region. The findings have key policy implications for banking practitioners, regulators, and policy makers in the region.
KW - Banking crisis
KW - Corporate governance
KW - Governance reforms
KW - Risk-taking
UR - http://www.scopus.com/inward/record.url?scp=85171181949&partnerID=8YFLogxK
U2 - 10.1057/s41261-023-00226-7
DO - 10.1057/s41261-023-00226-7
M3 - Article
AN - SCOPUS:85171181949
SN - 1745-6452
VL - 25
SP - 209
EP - 233
JO - Journal of Banking Regulation
JF - Journal of Banking Regulation
IS - 3
ER -