Do governance factors affect the effectiveness of risk management disclosure in UAE banks?

Hazza Abdulla and Tamer Elshandidy

Cogent Business & Management, 2023, vol. 10, issue 2, 2238394

Abstract: This paper examines the impact of governance factors on the effectiveness of credit, market, operational, and aggregate risk disclosures in banks. The study measures the effectiveness of risk management disclosure by assessing the level of compliance with local and international banking regulations in the UAE. By controlling for year-fixed effects and other bank-level factors, the empirical analysis reveals that the influence of governance factors on the effectiveness of risk management disclosure varies depending on the type of risk being addressed (credit, market, operational, and aggregate). Moreover, the paper distinguishes between two prominent banking models, Islamic and Conventional, in line with the UAE’s banking landscape. The results indicate that differences in the effectiveness of risk management disclosure are observed mainly in the context of market risk between Islamic and Conventional banks. These findings hold significant practical implications not only within the UAE but also beyond its borders. By understanding the key governance factors that impact risk management disclosures, banks in the UAE can enhance their risk management practices and compliance with regulations. The insights gained from this paper can guide policymakers, regulators, and industry practitioners in implementing measures to improve risk management effectiveness. Furthermore, the results contribute to the broader academic literature on risk management and governance in the banking sector, offering valuable knowledge for researchers and scholars worldwide.

Date: 2023
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DOI: 10.1080/23311975.2023.2238394

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