Capital regulation and ownership structure on bank risk

Purpose – This paper aims to examine the impact of capital regulation, ownership structure and the degree of ownership concentration on the risk of commercial banks. Design/methodology/approach – This study uses a sample of 565 commercial banks from 52 countries over the period of 2011-2015. A dy...

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Main Authors:	Haron, Razali, Siddika, Aysa
Format:	Article
Language:	English English
Published:	Emerald Publishing Limited 2019
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/75363/ http://irep.iium.edu.my/75363/ http://irep.iium.edu.my/75363/ http://irep.iium.edu.my/75363/2/75363%20-%20Capital%20regulation%20and%20ownership%20structure%20on%20bank%20risk-%20Accepted%20version.pdf http://irep.iium.edu.my/75363/8/75363_Capital%20regulation%20and%20ownership%20structure%20on%20bank%20risk_Scopus.pdf

id	iium-75363
recordtype	eprints
spelling	iium-753632020-02-28T08:17:24Z http://irep.iium.edu.my/75363/ Capital regulation and ownership structure on bank risk Haron, Razali Siddika, Aysa HG1501 Banking Purpose – This paper aims to examine the impact of capital regulation, ownership structure and the degree of ownership concentration on the risk of commercial banks. Design/methodology/approach – This study uses a sample of 565 commercial banks from 52 countries over the period of 2011-2015. A dynamic panel data model estimation using the maximum likelihood with structural equation modelling (SEM) was followed considering the panel nature of this study. Findings – The study found that the increase of capital ratio decreases bank risk and the regulatory pressure increases the risk-taking of the bank. No statistically significant relationship between banks’ ownership structure and risk-taking was found. The concentration of ownership was found negatively associated with bank risk. Finally, the study found that in the long term, bank increases the capital level that decreases the default risk. Originality/value – This study presents an empirical analysis on the global banking system focusing on the Basel Committee member and non-member countries that reflect the implementation of Basel II and Basel III. Therefore, it helps fill the gap in the banking literature on the effect of recent changes in the capital regulation on bank risk. Maximum likelihood with SEM addresses the issue of endogeneity, efficiency and time-invariant variables. Moreover, this study measures the risk by different proxy variables that address total, default and liquidity risks of the banks. Examining from a different perspective of riskmakes the study more robust. Emerald Publishing Limited 2019-10-05 Article PeerReviewed application/pdf en http://irep.iium.edu.my/75363/2/75363%20-%20Capital%20regulation%20and%20ownership%20structure%20on%20bank%20risk-%20Accepted%20version.pdf application/pdf en http://irep.iium.edu.my/75363/8/75363_Capital%20regulation%20and%20ownership%20structure%20on%20bank%20risk_Scopus.pdf Haron, Razali and Siddika, Aysa (2019) Capital regulation and ownership structure on bank risk. Journal of Financial Regulation and Compliance. ISSN 1358-1988 (In Press) https://www.emerald.com/insight/publication/issn/1358-1988 https://doi.org/10.1108/JFRC-02-2019-0015
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Haron, Razali Siddika, Aysa Capital regulation and ownership structure on bank risk
description	Purpose – This paper aims to examine the impact of capital regulation, ownership structure and the degree of ownership concentration on the risk of commercial banks. Design/methodology/approach – This study uses a sample of 565 commercial banks from 52 countries over the period of 2011-2015. A dynamic panel data model estimation using the maximum likelihood with structural equation modelling (SEM) was followed considering the panel nature of this study. Findings – The study found that the increase of capital ratio decreases bank risk and the regulatory pressure increases the risk-taking of the bank. No statistically significant relationship between banks’ ownership structure and risk-taking was found. The concentration of ownership was found negatively associated with bank risk. Finally, the study found that in the long term, bank increases the capital level that decreases the default risk. Originality/value – This study presents an empirical analysis on the global banking system focusing on the Basel Committee member and non-member countries that reflect the implementation of Basel II and Basel III. Therefore, it helps fill the gap in the banking literature on the effect of recent changes in the capital regulation on bank risk. Maximum likelihood with SEM addresses the issue of endogeneity, efficiency and time-invariant variables. Moreover, this study measures the risk by different proxy variables that address total, default and liquidity risks of the banks. Examining from a different perspective of riskmakes the study more robust.
format	Article
author	Haron, Razali Siddika, Aysa
author_facet	Haron, Razali Siddika, Aysa
author_sort	Haron, Razali
title	Capital regulation and ownership structure on bank risk
title_short	Capital regulation and ownership structure on bank risk
title_full	Capital regulation and ownership structure on bank risk
title_fullStr	Capital regulation and ownership structure on bank risk
title_full_unstemmed	Capital regulation and ownership structure on bank risk
title_sort	capital regulation and ownership structure on bank risk
publisher	Emerald Publishing Limited
publishDate	2019
url	http://irep.iium.edu.my/75363/ http://irep.iium.edu.my/75363/ http://irep.iium.edu.my/75363/ http://irep.iium.edu.my/75363/2/75363%20-%20Capital%20regulation%20and%20ownership%20structure%20on%20bank%20risk-%20Accepted%20version.pdf http://irep.iium.edu.my/75363/8/75363_Capital%20regulation%20and%20ownership%20structure%20on%20bank%20risk_Scopus.pdf
first_indexed	2023-09-18T21:46:38Z
last_indexed	2023-09-18T21:46:38Z
_version_	1777413493210742784

Capital regulation and ownership structure on bank risk

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