Economics at your fingertips  

Risk governance and financial stability: A comparative study of conventional and Islamic banks in the GCC

Hajar Raouf and Habib Ahmed

Global Finance Journal, 2022, vol. 52, issue C

Abstract: While the linkage between bank governance and financial stability has been discussed widely, empirical explorations of the strength of this relationship are scant. This paper examines the specific role of risk governance in promoting financial stability in banks. Using hand-collected data, it develops a Risk Governance Index (RGI) to measure the strength of risk governance structures and then examines its impact on four main indicators of financial stability for conventional and Islamic banks in the countries of Gulf Cooperation Council (GCC). The results from the dynamic panel models using two-step GMM method suggest that risk governance significantly contributes to the enhancement of the key financial stability measures. The RGI for Islamic banks is found to be smaller than their conventional counterparts and the regression results indicate that risk governance in Islamic banks has a negative impact on stability indicators. While the business models of Islamic banks have features that can enhance stability, poor risk governance can potentially negate this positive feature.

Keywords: Corporate governance; Risk governance; Financial stability; Islamic banks (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.gfj.2020.100599

Access Statistics for this article

Global Finance Journal is currently edited by Manuchehr Shahrokhi

More articles in Global Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2022-07-09
Handle: RePEc:eee:glofin:v:52:y:2022:i:c:s1044028320302994