GLOBAL FINANCIAL CRISIS AND CREDIT RISK DISCLOSURE IN THE UAE BANKS

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Abstract

The aim of this study is to establish a model to explain the reasons for changing the level of credit risk disclosure among the UAE Banks over the period 2006-2009. Multiple regression analysis is used to test the relationship between the level of credit risk disclosure as a dependent variable and global financial crisis and other independent variables. The results show that global financial crisis, foreign ownership, bank age, investment in information technology systems and bank profitability variables have a significant impact on the level of credit risk disclosure. In addition the results show that listing age has no impact on the level of credit risk disclosure. More evidence is needed on the determinants of the level of credit risk disclosure before any generalization of the results can be made. In addition, the empirical tests were conducted only on the UAE Banks Group over the period 2006-2009 and hence the results of the study cannot be assumed to extend beyond this group of banks or to different study periods. The study might help the reporting regulators in formulating guidelines or/and standards for disclosing information about credit risk in banks. In addition, knowing the factors which might affect the level of credit risk disclosure might help in formulating strategies and policies to help in that extent. This paper adds to the literature of credit risk disclosure studies through explaining for the first time the determinants of level of credit risk disclosure only in banks. In particular, it tests the new theories that global financial crisis, foreign ownership, bank age, investment in information technology systems, bank profitability and listing age have a significant impact on the level of credit risk disclosure.

Keywords: Credit Risk Disclosure, Global Financial Crisis, Foreign Ownership, Bank Age, Investment in Information Technology Systems, Bank Profitability, Listing Age, United Arab Emirates

How to cite this paper: El-Bannany, M. (2015). Global financial crisis and credit risk disclosure in the UAE banks. Risk governance & control: Financial markets & institutions, 5(1), 20-26. https://doi.org/10.22495/rgcv5i1art2