Title: Extent and determinants of bank risk-taking: evidence from Tunisia

Authors: Sana Gaied-Chortane; Abderrazek Elkhaldi; Mohamed Omran

Addresses: Institute of Higher Business Studies of Sousse, University of Sousse, Tunisia; LA REMFiQ Laboratory, University of Sousse, Tunisia; LEO Labotary, Université d'Orléans, France ' Dar Al Uloom University, College of Business Administration, Riyadh, Saudi Arabia; RIMRAF Research Laboratory, University of La Manouba, La Manouba, Tunisia ' International Business School Suzhou, Xi'an Jiaotong-Liverpool University, Suzhou Industrial Park, Jiangsu Province, 215123, China

Abstract: This study assesses risk-taking and investigates the effect of internal governance mechanisms and ownership structure on risk-taking in Tunisian banks. We collected data from the banks listed on the Tunisian Stock Exchanges from 2009-2019. Our results show that credit risk is the leading risk to which Tunisian banks are exposed. The board size positively affects risk-taking. The concentration of bank ownership increases liquidity and credit risk-taking, while the participation of the government in bank ownership increases insolvency and credit risk-taking. Risk-taking also is positively associated with profitability and capital adequacy ratio (CAR). Investors may find this study helpful as it analyses the effect of board attributes and ownership structure on bank risk-taking in a developing country. Tunisian banks may use our findings to improve the quality of corporate governance mechanisms and risk-taking practices. Regulators in Tunisia and other developing countries can use our results to enhance internal governance regulations/guidelines.

Keywords: internal governance mechanisms; ownership structure; risk-taking; principal component analysis; PCA; Tunisia.

DOI: 10.1504/IJCG.2023.132454

International Journal of Corporate Governance, 2023 Vol.13 No.4, pp.361 - 382

Received: 12 Oct 2022
Accepted: 17 Apr 2023
Published online: 20 Jul 2023 *

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