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Financial openness, disclosure and bank risk-taking in MENA countries

Arnaud Bourgain, Patrice Pieretti and Skerdilajda Zanaj

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: In this paper, we analyze the risk-taking behavior of banks in emerging economies in a context of international capital mobility. Our paper highlights a new channel through which depositors can exercise pressure to control risk taking. Depositors can reallocate their savings away from their home country to the more protective system of a developed economy. We recover a classical result according to which increased competition resulting from more international financial openness induces banks to take excessive risks. We find however that sufficiently high financial openness is necessary for a positive link between financial transparency and safe risk management. Finally, we test the relationship between disclosure, financial openness and bank risk-taking for a panel of 258 banks from the MENA region and Turkey.

Keywords: banking competition; disclosure; bank risk-taking; MENA banking sectors; mock compliance (search for similar items in EconPapers)
JEL-codes: F39 G21 G28 L80 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Journal Article: Financial openness, disclosure and bank risk-taking in MENA countries (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:11-11

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