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Impact of risk governance on performance and capital requirements: Evidence from Egyptian banks
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Tariq H. Ismail 
, Eman A. Ahmed
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
This study aims to examine the impact of banks’ risk governance (RG) on Egyptian listed banks’ performance and capital requirements as prescribed in Basel regulations. Secondary data from annual reports of all twelve banks listed on the Egyptian Stock Market (EGX) over eleven years (2010–2020) are analyzed using the dynamic ordinary least squares method; where the RG framework is presented by the proxy of the presence of chief risk officer (CRO), risk committee (RC), and audit committee (AC) characteristics. Secondary data from annual reports of all twelve banks listed on the EGX over eleven years are analyzed using the dynamic ordinary least squares method. The results support the role of banks’ RG in improving banks’ both market-based and accounting-based performance. These findings support the importance of having an independent risk committee and a powerful CRO because they can regulate banks’ increasing risk and acquire the advantages of capital requirements by investing assets in more profitable ways with low risk. This paper is one of the few empirical attempts in emerging economics to link bank RG, risk-taking behavior, performance, and capital adequacy ratio (CAR) as defined by Basel III.
Keywords: Risk Governance, Risk Committee, Chief Risk Officer, Audit Committee, Egyptian Listed Banks, Bank Performance, Basel III
Authors’ individual contribution: Conceptualization — T.H.I.; Methodology — E.A.A.; Investigation — E.A.A.; Writing — T.H.I. and E.A.A.; Supervision — T.H.I.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: G2, G3, G4, M41
Received: 07.01.2021
Accepted: 28.02.2022
Published online: 01.03.2022
How to cite this paper: Ismail, T. H., & Ahmed, E. A. (2022). Impact of risk governance on performance and capital requirements: Evidence from Egyptian banks. Corporate Ownership & Control, 19(2), 179–193. https://doi.org/10.22495/cocv19i2art14
