Ownership Structure and Bank Risk-Taking: Empirical Evidence from the Middle East and North Africa

Abstract

This paper examines the impact of bank ownership structure on bank risk-taking. It used balance sheet information for around 72 commercial banks from 10 Middle East and North Africa (MENA) countries from 2000 to 2010. The main results emerged. After controlling for bank characteristics and country effects, we find that concentrated ownership structure is associated with an increase in bank risk-taking. Further, foreign-owned banks are more risked than Domestic-owned banks; however, Government-owned banks are more stable. For listed banks family ownership has positive impact on credit risk. So, family owners impose riskiest strategies when they hold higher stakes. For unlisted banks the effect of family and institutional ownership on risk is negative. Finally we conclude that the effect of owners identity on bank risk-taking depends on the fact that bank is listed or unlisted.

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