Get advanced or retreat: well-informed board and bank risk-taking
Issued Date
2024-01-01
Resource Type
ISSN
14757702
eISSN
17587700
Scopus ID
2-s2.0-85190358728
Journal Title
Review of Accounting and Finance
Rights Holder(s)
SCOPUS
Bibliographic Citation
Review of Accounting and Finance (2024)
Suggested Citation
Saeed A., Kamran K., Thanakijsombat T., Manita R. Get advanced or retreat: well-informed board and bank risk-taking. Review of Accounting and Finance (2024). doi:10.1108/RAF-06-2023-0194 Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/98068
Title
Get advanced or retreat: well-informed board and bank risk-taking
Author(s)
Corresponding Author(s)
Other Contributor(s)
Abstract
Purpose: This paper aims to examine the relationship between board structure and risk-taking, exploring how this association is influenced by advanced technologies in the banking sector. Design/methodology/approach: This study uses a panel sample of 22 Pakistani banks from 2011 to 2018. To test the authors’ hypothesis, the authors use regression analysis with two-way cluster robust standard errors. Further, the authors also check the robustness of the authors’ findings using alternate proxies of board structure and bank risk-taking behavior. To address endogeneity concerns, the authors use the two-stage least square technique. Findings: In the era of the Fourth Industrial Revolution, Pakistani banks’ digitalization is modeled by the presence of Temenos-T24/Oracle as their core banking system (software providing end-to-end operational integration). Its interactional effect with corporate governance is evaluated to implicate informed risk-taking by the board as a result of improved information access and analysis. The authors find that board size has a positive association with risk-taking, and the use of modern technology reshapes this association in the banking sector. Originality/value: The contribution of this paper is twofold. First, the impact of board structure on bank risk-taking has not been extensively researched in Pakistan – a highly volatile and unpredictable economy. Second, the evaluation of the role of technology on bank risk is being researched for the very first time – a uniqueness of this paper.