Diversification, Size and Risk at Spanish Banks

Gascón, Fernando; González, Víctor

doi:10.2139/ssrn.233656

Cited by 4 publications

(3 citation statements)

References 10 publications

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“…Although large banks have the ability to diversify risk across product lines and have a more sophisticated risk management tool, certain activities and characteristics usually associated with them may be inherently risky . Gascón and González Méndez (2000) found large banks have greater diversification opportunities but they also have larger non-systematic risk; thus offsetting the benefits of such diversification. Further, banks have the tendency to engage in riskier ventures as they grew larger due to the perception of too big to fail and the increasing possibility of a government bailout if they face financial trouble (Bhagat, Bolton & Lu 2015).…”

Section: Definitions Of Variablesmentioning

confidence: 99%

Board Size, Chief Risk Officer and Risk-taking in Islamic Banks: Role of Shariah Supervisory Board

Najwa¹,

Ramly

Haron³

2019

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This paper aims to examine the moderating effect of Shariah Supervisory Boards (SSBs) on the relationship between board size, Chief Risk Officer (CRO), and risk-taking of 24 Islamic banks (IBs) in Malaysia, Indonesia and Brunei from 2010 to 2015. This approach integrates the arguments of agency theory and resource dependence theory. The results of panel regression indicate that the appointment of a CRO as an executive board member reduces credit risk, implying that the appointment of a CRO as a risk expert in IBs enhances the management of risk and monitoring of risk-taking activities. Further, larger board is likely to reduce insolvency risk when an SSB has higher percentage of members with supervisory Shariah experience. Next, this study observes that larger SSB size and a higher percentage of members with Shariah supervision experience moderate the relationship between the CRO and insolvency risk. Overall, this study highlights the important role of board size, CRO and SSB in the risk-taking of Islamic banks, which have received little attention in the extant literature. ABSTRAK Tujuan kajian ini adalah untuk mengkaji kesan saiz lembaga pengarah (LP) dan Ketua Pegawai Risiko (KPR) ke atas pengambilan risiko di 24 bank-bank Islam di Malaysia, Indonesia dan Brunei dari tahun 2010 hingga 2015 dan sama ada kesan tersebut disederhanakan oleh Lembaga Penyeliaan Syariah (LPS). Kaedah ini mengintegrasikan hujah-hujah teori agensi dengan teori pergantungan sumber. Hasil analisa regresi data berpanel menunjukkan pelantikan KPR sebagai ahli eksetutif mengurangkan risiko kredit. Hasil ini menyiratkan yang pelantikan KPR sebagai pakar risiko di bank-bank Islam telah meningkatkan pengurusan dan pemantauan risiko di dalam aktivit-aktivitii pengambilan risiko. Selanjutnya, saiz LP yang lebih besar boleh mengurangkan risiko insolvensi dengan syarat peratus keanggotaan LPS dari kalangan ahli-ahli yang berpengalaman di dalam penyeliaan Syariah adalah tinggi. Seterusnya, kajian ini mendapati saiz LPS yang besar dan peratusan yang tinggi ahli-ahli LPS mempunyai pengalaman di dalam penyeliaan Syariah menyederhanakan hubungan di antara KPR dan risiko insolvensi. Keseluruhannya, kajian ini menyorotkan peranan penting saiz LP, KPR dan LPS di dalam aktiviti-aktiviti pengambilan risiko di bank-bank Islam. Selama ini kajian-kajian sedia ada hanya memberikan sedikit perhatian terhadap perkara ini.

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Section: Definitions Of Variablesmentioning

confidence: 99%

Board Size, Chief Risk Officer and Risk-taking in Islamic Banks: Role of Shariah Supervisory Board

Najwa¹,

Ramly

Haron³

2019

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“…As internationalization is commonly known a risk diversifying tool that can minimize the risk by diversifying portfolio. There are many studies that documented both positive relation (Gascón & González, 2000) as well as a negative relation (Berger et al, 2017) with risk-taking. So, here is also positive beta coeffi- H2: Non-performing loan ratio has a significant relationship with the risk-taking of the selected banks.…”

Section: Testing Z-score Hypothesesmentioning

confidence: 99%

Determinants of the sustainable internationalization and risk‐taking factors in public commercial banks

Ashfaq

Maqbool

Rashid

2021

Journal of Public Affairs

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Banking activities have crossed the border and spread worldwide. Internationalization is known as the need of the day for sustainability in height competitive banking sector trends. Is there any effect of internationalization on profitability to sustain in a competitive market or just increases risk factors? Here, the study investigates the need and effect of internationalization on bank risk in developing country like Pakistan by using seven public commercial banks' quarterly data that are being taken for the duration from2007 to 2016. The study constructs hypotheses to justify the significance or insignificance relation of risk with internationalization variables and some other bank-specific variables that independently affect the risk-taking of internationalized banks. The main variables are Z-score for risk measurement and to evaluate the degree of internationalization. The study used foreign loan ratio and foreign income ratios. To support our work, the study also constructed some control variables like size, income diversification, and listed. We find that internationalization is associated with higher income earning in significant and positive relation with risk.

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“…Demsetz & Strahan (1997) andGascón & González (2000) provide evidence for US and European banks, respectively. 9 ©International Monetary Fund.…”

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confidence: 99%

Bank Balance Sheets and the Value of Lending

Chen

Vera²

2017

IMF Working Papers

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We study 1,400 UK syndicated loans, together with the financial history of the lead bank and the borrowing firm. We interpret abnormal equity returns around loan announcements as the value of the lending relationship to the firm. We find that: (i) Consistent with previous evidence, the value of lending is higher when the firm is riskier or more opaque, suggesting that it primarily reflects the lead bank's screening and monitoring activities. (ii) As a bank becomes larger, more profitable or more capitalized, the value of its loans first increases and then decreases. The largest, most capitalised or most profitable banks do not give the most valuable loans. (iii) Firms which receive low-value loans are more likely to experience low profitability and financial distress during the lending relationship. By relating the state of bank balance sheets to borrower performance, we offer a new angle to evaluate the impact of financial conditions on the real economy.

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Diversification, Size and Risk at Spanish Banks

Cited by 4 publications

References 10 publications

Board Size, Chief Risk Officer and Risk-taking in Islamic Banks: Role of Shariah Supervisory Board

Board Size, Chief Risk Officer and Risk-taking in Islamic Banks: Role of Shariah Supervisory Board

Determinants of the sustainable internationalization and risk‐taking factors in public commercial banks

Bank Balance Sheets and the Value of Lending

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