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Bank governance and risk-taking: a survey of the literature

Ramly, Zulkufly and Ahmed, Noofal Mohsen (2021) Bank governance and risk-taking: a survey of the literature. The Middle East International Journal for Social Sciences, 3 (4). pp. 236-259. E-ISSN 2682-8766

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This paper aims to review the existing theoretical and empirical literature on the relationship between bank governance mainly board of directors’ features and risk-taking to provide a full understanding of the prior research and offer guidance for investors, regulators, and researchers about the points of consensus and disagreement among researchers around the issue and to suggest opportunities for future research in this field. The relationship between corporate governance and risk-taking in the banking industry gained increased attention in the last few years due to a series of financial scandals particularly, the global financial crisis that escalated in 2007-2008. Banks are unique financial institutions and they differ from non-financial institutions which justifies that the set of traditional corporate governance mechanisms does not hold for banks. Thus, focusing on the vast number of the key elements of corporate governance such as the features of the board of directors that may affect the risk-taking decisions, this paper attempted to bring together this diverse body of knowledge to clarify the main issue about corporate governance of banks. In light of the discussion of the existing literature, this paper concludes that the effect of the board of directors features on the risk-taking of banks still requires more empirical investigation using alternative analytical methods and alternative measures of risks of the banking industry in general and IBs particularly. Besides that, future studies should pay more attention to the risk-taking of IBs and the differences across their Shariah governance models, the effect of the features of the Shariah supervisory board (SSB), and the role of SSB with interaction with the board of directors. .

Item Type: Article (Journal)
Additional Information: 7002/96357
Uncontrolled Keywords: Banks, corporate governance, risk-taking
Subjects: H Social Sciences > HG Finance > HG1501 Banking
H Social Sciences > HG Finance > HG3691 Credit
H Social Sciences > HG Finance > HG4001 Financial management. Business finance. Corporation finance.
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Economics and Management Sciences > Department of Finance
Kulliyyah of Economics and Management Sciences
Depositing User: Dr Zulkufly Ramly
Date Deposited: 19 Jan 2022 14:50
Last Modified: 19 Jan 2022 14:50
URI: http://irep.iium.edu.my/id/eprint/96357

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