Basel III, Ownership Concentration, Risk-Taking, and Capital Stability: Evidence from Asia

2014 ◽  
Author(s):  
Pichaphop Chalermchatvichien ◽  
Seksak Jumreonwong ◽  
Pornsit Jiraporn
Keyword(s):  
Risk Taking ◽  
Ownership Concentration ◽  
Basel Iii

The impact of bank liquidity risk on risk-taking and bank lending: evidence from European bank

2021 ◽  
Vol 6 (2) ◽  
pp. 82-97
Author(s):  
Hongyan Liang ◽  
Zilong Liu
Keyword(s):  
Growth Rate ◽  
Risk Taking ◽  
Fixed Effects ◽  
Liquidity Risk ◽  
Bank Lending ◽  
Basel Iii ◽  
European Banks ◽  
Risk Taking Behavior ◽  
Loan Growth ◽  
The Impact

Objective – This paper uses a sample of annual observations of European banks to examine whether the liquidity risk affects a bank’s risk-taking behavior and its future loan growth. Methodology – A sample of European banks (27 member countries of the European Union plus U.K.) over the period of 2005 to 2019 are used in this study. Liquidity risk is measured by the ratio of liquid assets to total assets. Given the longitudinal nature of the data, the authors use panel regression with bank fixed effects to control for unobserved characteristics that might affect the dependent variable. Findings – The authors find that banks holding more liquid assets take less risk and show a higher subsequent loan growth rate. These results hold for both small and large banks. Novelty – To the authors’ best knowledge, this is one of the earliest studies to carefully examine the effects of liquidity risk on risk-taking behavior and loan growth rate for European banks. Our research suggests that the current Basel III requirement on liquidity ratio can decrease bank’s risking-taking behavior while not necessarily impact their future loan growth. Type of Paper: Empirical JEL Classification: G21, G01, G18. Keywords: Bank Liquidity Risk; Risk-taking Behavior; Loan Growth; Basel III

scholarly journals Corporate Ownership Structure as a Determinant of “Risk Taking”: Insights from Italian Listed Companies

2020 ◽  
Vol 15 (11) ◽  
pp. 138
Author(s):  
Pier Luigi Marchini ◽  
Veronica Tibiletti ◽  
Alice Medioli ◽  
Gianluca Gabrielli
Keyword(s):  
Risk Management ◽  
Ownership Structure ◽  
Risk Taking ◽  
Listed Companies ◽  
Governance Structure ◽  
Interesting Case ◽  
Ownership Concentration ◽  
Contributing Factors ◽  
Corporate Transparency ◽  
Management Procedures

Ever since major accounting scandals and corporate collapses of the early 2000’s, the improved risk taking and the lax approach to risk management procedures, which are viewed as contributing factors to the market breakdown that occurred in the international market and, in particular, in the U.S. in 2007, have led to an increased awareness of the importance of managing risk on the part of listed companies. Risk management has gained importance in the definition of what it means to be the best and most efficient corporate governance structure and mechanism, as it can play a fundamental role in helping to achieve the company’s target. Also disclosure related to risk management is fundamental for the efficient functioning of capital markets since it helps to improve corporate transparency and to reduce the information asymmetry between insiders and outsiders. This paper aims to investigate the relationship between ownership structure and corporate risk-taking behavior and disclosure, as a tool for protecting shareholders, among Italian listed companies. The analysis is devoted to the Italian stock market because it is strongly characterized by a high ownership concentration and by the presence of a family ownership model; and this scenario makes the Italian one an interesting case to study. Based on a sample of 233 Italian listed companies, through a multivariate regression, we find that a high level of ownership concentration is positively related to a firms' low level of risk taking by the board of directors, so giving interesting insights to regulators and practitioners, as well as for further research.

scholarly journals Pengaruh Konsentrasi Kepemilikan, dan Keterbukaan, Diversifikasi, Terhadap Risiko Bank

2016 ◽  
Vol 4 (2) ◽  
Author(s):  
Prathama Nugraha
Keyword(s):  
Risk Taking ◽  
Information Disclosure ◽  
Financial Institution ◽  
Ownership Concentration ◽  
Bank Risk ◽  
Income Diversification ◽  
Risk Levels ◽  
Analysis Techniques ◽  
Bank Management ◽  
The Right

Bank is a financial institution that must able to guarantee the funds entrusted by the community. This guarantee related to the ability of banks to maintain their risk levels. As revealed by the theories and previous studies, a bank level of risk taking might determined by the concentration of the ownership, a party that determines the bank management. Additionally compliance in carrying out the principles of openness and the ability of banks to obtain other revenues outside the main business as intermediaries of funds from customers to the creditors also shown to determine the level of bank risk taking. By using multiple regression analysis techniques and observation of data during a period of 5 years, this study found that the level of a bank's risk taking is influenced by the disclosure of information and income diversification. The higher the index the information disclosure and diversification the lower the risk. Ownership concentration has shown the right coefficient direction corresponding to the risk but it is not statistically significant. Key Words: Risk Taking, Ownership Concentrations, Information Disclosure, Bank Income Diversification.

scholarly journals Contrasting Trends in Firm Volatility

2011 ◽  
Vol 3 (4) ◽  
pp. 143-180 ◽  
Author(s):  
David Thesmar ◽  
Mathias Thoenig
Keyword(s):  
Risk Taking ◽  
Ownership Concentration ◽  
International Capital ◽  
Firm Level ◽  
International Capital Markets ◽  
Listed Firms ◽  
Financial Volatility ◽  
The Past ◽  
Stock Market Participation ◽  
Choice Variable

Over the past decades, the real and financial volatility of listed firms has increased, while the volatility of private firms has decreased. We first provide panel data evidence that, at the firm level, sales and employment volatility are impacted by changes in the degree of ownership concentration. We then construct a model with private and listed firms where risk-taking is a choice variable at the firm-level. Due to general equilibrium feedback, we find that both an increase in stock market participation and integration in international capital markets generate opposite trends in volatility for private and listed firms. (JEL G15, G32, L25)

scholarly journals Developing “best practices” for bankers’ pay in line with Basel III.

2011 ◽  
Vol 1 (3) ◽  
pp. 7-16 ◽  
Author(s):  
Peiyi Yu ◽  
Jessica Hong Yang ◽  
Nada Kakabadse
Keyword(s):  
Financial Crisis ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Incentive Compensation ◽  
Basel Iii ◽  
Bank Capital ◽  
Bank Executives ◽  
The Global Financial Crisis

This paper proposes hybrid capital securities as a significant part of senior bank executive incentive compensation in light of Basel III, a new global regulatory standard on bank capital adequacy and liquidity agreed by the members of the Basel Committee on Banking Supervision. The committee developed Basel III in a response to the deficiencies in financial regulation brought about by the global financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The hybrid bank capital securities we propose for bank executives’ compensation are preferred shares and subordinated debt that the June 2004 Basel II regulatory framework recognised as other admissible forms of capital. The past two decades have witnessed dramatic increase in performance-related pay in the banking industry. Stakeholders such as shareholders, debtholders and regulators criticise traditional cash and equity-based compensation for encouraging bank executives’ excessive risk taking and short-termism, which has resulted in the failure of risk management in high profile banks during the global financial crisis. Paying compensation in the form of hybrid bank capital securities may align the interests of executives with those of stakeholders and help banks regain their reputation for prudence after years of aggressive risk-taking. Additionally, banks are desperately seeking to raise capital in order to bolster balance sheets damaged by the ongoing credit crisis. Tapping their own senior employees with large incentive compensation packages may be a viable additional source of capital that is politically acceptable in times of large-scale bailouts of the financial sector and economically wise as it aligns the interests of the executives with the need for a stable financial system.

Determinan Risk Taking Bank Perkreditan Rakyat Di Daerah Istimewa Yogyakarta

2020 ◽  
Vol 15 (1) ◽  
Author(s):  
Risal Rinofah
Keyword(s):  
Regression Analysis ◽  
Multiple Regression Analysis ◽  
Multiple Regression ◽  
Risk Taking ◽  
Ownership Concentration ◽  
Risk Level ◽  
Income Diversification ◽  
Economy Growth ◽  
Analysis Technique

The purpose of this research is to test the efficiency, diversification and ownership concentration on risk level of BPR banks in DIY. BPR is chosen because it has a closed relationship with SMEs due to its main functions on the micro economy growth through credit channeling.Research data on 26 BPR during 2012-2016 were tested using multiple regression analysis technique. The test concludes only the efficiency proven to affect the risk of BPR banks. While the level of income diversification and ownership concentration has no effect.Keywords: efficiency, diversification and concentration of ownership to the level risk

8. Micro-prudential regulation I

2019 ◽  
pp. 329-406
Author(s):  
Iris H-Y Chiu ◽  
Joanna Wilson
Keyword(s):  
Financial Crisis ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Basel Ii ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Prudential Regulation ◽  
Basel Committee ◽  
The Global Financial Crisis ◽  
Capital Adequacy Regulation

This chapter studies capital adequacy regulation, which prescribes that banks can only take certain levels of risk that are supported by adequate levels of capital. In this way, capital adequacy rules provide a form of assurance that banks with adequate levels of capital are likely able to withstand losses that may result from their risk-taking. The Basel Committee developed its first set of capital adequacy standards in the Basel I Capital Accord of 1988. It was subsequently overhauled into the Basel II Capital Accord in 2003. After the global financial crisis of 2007–9, the Basel II Accord’s shortcomings were extensively discussed and the Basel Committee introduced a package of reforms in order to plug the gaps in Basel II. The Basel III package is the most extensive suite of micro-prudential regulation reforms seen to date, as they deal with capital adequacy and a range of other micro-prudential standards.

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