Open AccessState Ownership and Risk-Taking Behaviour: Evidence from Malaysia’s Banking Industry
Author(s) -
Ai-Xin Lee,
CheeWooi Hooy
Publication year - 2020
Publication title -
s and p : sound and pictures
Language(s) - English
Resource type - Journals
ISSN - 1675-722X
DOI - 10.32890/ijbf.15.2.2020.9381
Subject(s) - corporate governance , business , banking industry , state ownership , financial system , panel data , government (linguistics) , state (computer science) , accounting , monetary economics , finance , economics , emerging markets , linguistics , philosophy , algorithm , computer science , econometrics
This study investigates state ownership on risk-taking behaviour in Malaysia’s banking industry. Using the panel of Malaysian commercial banks, this paper examines whether banks’ risk-taking is affected by Malaysian government ownership through the five largest investment arms of Malaysia (GLICs). The findings show that state-owned banks exhibit higher risk-taking behaviour compared to the private-owned banks in terms of loans. There is evidence that a higher degree of state ownership has a more significant impact on banks’ risk-taking behaviour. We also investigate the relationship with corporate governance mechanisms. The findings suggest that the composition of board of directors somehow plays a significant role in the governance of banks.