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The Effects of Ownership Structure and Competition on Risk-Taking Behavior: Evidence from UAE Conventional and Islamic Banks

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  • Hussein A. Hassan Al-Tamimi
  • Neila Jellali

Abstract

The objective of this study is to examine the effect of ownership structure and competition on risk-taking behaviour of UAE banks during the period 1998–2010. The study covers 15 national banks, including eleven conventional banks and four are Islamic banks. The proportion of ownership by government, private sector and institutional ownership measures ownership structure. Concentration is used as a measure of competition. Three control variables are also included in the analysis economic condition, bank size and profitability. The main findings of this study are that UAE conventional banks are riskier than Islamic banks; concentration of UAE conventional national banks is negatively associated with bank risk-taking, but this inverse relationship is not confirmed in the case of Islamic banks; and the private ownership of UAE national banks is negatively associated with bank risk-taking. Finally, the results indicate that there is a significant difference between UAE conventional banks and Islamic banks regarding risk-taking behaviour.

Suggested Citation

  • Hussein A. Hassan Al-Tamimi & Neila Jellali, 2013. "The Effects of Ownership Structure and Competition on Risk-Taking Behavior: Evidence from UAE Conventional and Islamic Banks," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 7(2), pages 115-124.
    • Handle: RePEc:ibf:ijbfre:v:7:y:2013:i:2:p:115-124
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    References listed on IDEAS

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    Cited by:

    1. Lassoued, Naima & Sassi, Houda & Ben Rejeb Attia, Mouna, 2016. "The impact of state and foreign ownership on banking risk: Evidence from the MENA countries," Research in International Business and Finance, Elsevier, vol. 36(C), pages 167-178.
    2. Alraheb, Tammuz H. & Nicolas, Christina & Tarazi, Amine, 2019. "Institutional environment and bank capital ratios," Journal of Financial Stability, Elsevier, vol. 43(C), pages 1-24.
    3. Tuan Ho & Duc N. Phung & Yen N. Nguyen, 2021. "State ownership and corporate risk‐taking: Empirical evidence in Vietnam," Australian Economic Papers, Wiley Blackwell, vol. 60(3), pages 466-481, September.

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    More about this item

    Keywords

    Ownership Structure; Competition; Risk-taking; UAE Conventional National Banks; UAE Islamic Banks;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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