Moral hazard and risk-taking incentives in Islamic banks, does franchise value matter!

Mili, Mehdi and Abid, Sam,(2017), Moral hazard and risk-taking incentives in Islamic banks, does franchise value matter! , International Journal of Islamic and Middle Eastern Finance and Management, UNSPECIFIED

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Abstract

Purpose – This paper aims to examine risk-taking in Islamic banks by exploring moral hazard and owner/manager agency problems simultaneously. Design/methodology/approach – The authors propose to estimate a model of bank risk-taking that includes both franchise value and ownership structure as explanatory factors of bank risk. Findings – The results show that franchise value is an important determinant of Islamic bank risk-taking. Banks with high franchise values are less likely to take risks than banks with low franchise value. In contrast, outside block holders have, at best, limited influences on bank risk-taking. Originality/value – This paper conducts the first empirical examination of the relationship between managerial risk preferences and Islamic banks ownership. The authors examine simultaneously the effect of franchise value and owner/manager problem on Islamic bank risk taking behavior. They consider separately the impact on total risk, systematic risk and bank specific risk.
Keywords : Islamic banks, Ownership structure, Bank risk-taking, Franchise value, UNSPECIFIED
Journal or Publication Title: International Journal of Islamic and Middle Eastern Finance and Management
Volume: 10
Number: 1
Item Type: Article
Subjects: Ekonomi Islam
Depositing User: Heru Prastyo
Date Deposited: 20 Dec 2019 02:02
Last Modified: 20 Dec 2019 02:02
URI: https://repofeb.undip.ac.id/id/eprint/497

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