State Ownership and Risk-Taking Behaviour: Evidence from Malaysia’s Banking Industry

Authors

DOI:

https://doi.org/10.32890/ijbf2020.15.2.4

Keywords:

State ownership, GLICs, risk-taking, corporate governance, board of directors, Malaysia

Abstract

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.

 

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Published

31-07-2020

How to Cite

Lee, A.-X., & Hooy, C. W. (2020). State Ownership and Risk-Taking Behaviour: Evidence from Malaysia’s Banking Industry. International Journal of Banking and Finance, 15(2), 65–94. https://doi.org/10.32890/ijbf2020.15.2.4