The Effects of Ownership Structure and Competition on Risk-Taking Behavior: Evidence from UAE Conventional and Islamic Banks

Hussein A. Hassan Al-Tamimi and Neila Jellali

The International Journal of Business and Finance Research, 2013, vol. 7, issue 2, 115-124

Abstract: The objective of this study is to examine the effect of ownership structure and competition on risk-taking behaviour of UAE banks during the period 1998–2010. The study covers 15 national banks, including eleven conventional banks and four are Islamic banks. The proportion of ownership by government, private sector and institutional ownership measures ownership structure. Concentration is used as a measure of competition. Three control variables are also included in the analysis economic condition, bank size and profitability. The main findings of this study are that UAE conventional banks are riskier than Islamic banks; concentration of UAE conventional national banks is negatively associated with bank risk-taking, but this inverse relationship is not confirmed in the case of Islamic banks; and the private ownership of UAE national banks is negatively associated with bank risk-taking. Finally, the results indicate that there is a significant difference between UAE conventional banks and Islamic banks regarding risk-taking behaviour.

Keywords: Ownership Structure; Competition; Risk-taking; UAE Conventional National Banks; UAE Islamic Banks (search for similar items in EconPapers)
JEL-codes: G20 G21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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