The Relationship Between Board of Directors’ Characteristics and Bank Risk-Taking: Evidence from Egyptian Banking Sector
Journal of Finance and Accounting
Volume 5, Issue 1, January 2017, Pages: 24-33
Received: Dec. 18, 2016; Accepted: Jan. 3, 2017; Published: Jan. 24, 2017
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Authors
Mohamed Galal Abobakr, Department of Business Administration, Faculty of Commerce, Cairo University, Cairo, Egypt
Khairy Elgiziry, Department of Business Administration, Faculty of Commerce, Cairo University, Cairo, Egypt
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Abstract
There is argument that the main reason behind the corporate failure is the engagement of banks in excessive risk taking. However, the existence literature provides conflicting evidence in this concern. The main objectives of this study is to investigate the influence of board characteristics on bank risk taking, by using Pooled Ordinary Least Squares regression techniques to test a sample of 27 Egyptian banks covering the period from 2006 to 2011. Measures of bank risk employed are the insolvency risk, credit risk and liquidity risk. The explanatory variables of board characteristics are board size, non-executive directors, CEO duality, female presence and, board qualifications. The control variables are bank size, debt ratio, and crisis. The results show that Board size is positively significant with the three measures of risks. Non-executive directors are negatively significant correlated with both insolvency and liquidity risk. CEO’s duality is found positively significant with credit risk. Board female is negatively significant with insolvency and liquidity risk, while it is positively significant with credit risk. Board qualifications have no effect on the three measures of risks. The findings support the idea that board of director's characteristics is a determinant factor for bank risk taking.
Keywords
Board Characteristics, Bank Risk Taking, Insolvency Risk, Credit Risk, Liquidity Risk, and Egypt
To cite this article
Mohamed Galal Abobakr, Khairy Elgiziry, The Relationship Between Board of Directors’ Characteristics and Bank Risk-Taking: Evidence from Egyptian Banking Sector, Journal of Finance and Accounting. Vol. 5, No. 1, 2017, pp. 24-33. doi: 10.11648/j.jfa.20170501.13
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Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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