The Effects of Regulation, Competition and Ownership Structure on the Behavior of Bank Risktaking in Emerging Countries

Sarraj Mounir Hdr () and Ksiaa Hanène
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Sarraj Mounir Hdr: Faculté des sciences économique et de gestion de Sousse, Tunisia
Ksiaa Hanène: Faculté des sciences économique et de gestion de Sousse, Tunisia

International Journal of Economics and Empirical Research (IJEER), 2014, vol. 2, issue 3, 116-128

Abstract: The relationship between decision making and risk has important implications. The causal link between decision making and risk inevitably raises the issue of social responsibility, especially in areas where legal regulation science can’t predict that. Thus, recognizing the roots of risk helps the identification of the problem its allocation. Using 98 commercial banks in emerging countries over a period of five years (2004-2008) as a simple, we tried to test empirically the effect of regulation, competition (externalities) and ownership (internal effect) on risk-taking behavior of banks ex-ante and ex-post the provision of credit by using a model Z-Score and non-performing-loans with panel data. Our results show that nonperforming loans differ from the average significantly; the gap shows the heterogeneity of the sample selected which includes banks emerging at which information is opaque on different borrowers. The z-score deviates are quite dispersed significantly around the average, this gap spring returns to the heterogeneity of the sample selected which includes banks in emerging countries, in addition, it’s expected that banks approach the threshold of probability of failure by taking more risk. This paper shows new insights for policy makers to reduce risk.

Keywords: Externalities; Decision making criteria, Banks, Government policy (search for similar items in EconPapers)
JEL-codes: C33 D62 D81 (search for similar items in EconPapers)
Date: 2014
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