Risk governance and regulatory adjustments in the public commercial banks of OECD

Muddassar Malik

Journal of Financial Regulation and Compliance, 2024, vol. 32, issue 2, 266-289

Abstract: Purpose - This study aims to explore the relationship between risk governance characteristics (chief risk officer [CRO], chief financial officer [CFO] and senior directors [SENIOR]) and regulatory adjustments (RAs) in Organization for Economic Cooperation and Development public commercial banks. Design/methodology/approach - Using principal component analysis (PCA) and regression models, the research analyzes a representative data set of these banks. Findings - A significant negative correlation between risk governance characteristics and RAs is found. Sensitivity analysis on the regulatory Tier 1 capital ratio and the total capital ratio indicates mixed outcomes, suggesting a complex relationship that warrants further exploration. Research limitations/implications - The study’s limited sample size calls for further research to confirm findings and explore risk governance’s impact on banks’ capital structures. Practical implications - Enhanced risk governance could reduce RAs, influencing banking policy. Social implications - The study advocates for improved banking regulatory practices, potentially increasing sector stability and public trust. Originality/value - This study contributes to understanding risk governance’s role in regulatory compliance, offering insights for policymaking in banking.

Keywords: Banks; Risk governance; Regulatory compliance; Regulatory adjustments; G21; G28; G32; K23 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-06-2023-0090

DOI: 10.1108/JFRC-06-2023-0090

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