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Politically connected CEOs and risk-taking behaviour: comparative evidence from private and foreign-owned banks in China

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Listed:
  • Haithem Awijen
  • Hachmi Ben Ameur
  • Nidhaleddine Ben Cheikh
  • Younes Ben Zaied

Abstract

This study investigates the effect of CEOs' political connections on the risk-taking behaviour of banks in China over the period 2003-2017. Using both credit and insolvency risk measures, we show that political connections have a positive effect on banks' risk-taking behaviour. Bank ownership structure also positively moderates the relationship between political connections and risk-taking. Our empirical results have important policy implications for investors and the government. We highlight the importance of CEOs' political connections, which potentially play a role in determining a bank's risk-taking behaviour. Finally, our results are robust to alternative bank risk and ownership variables.

Suggested Citation

  • Haithem Awijen & Hachmi Ben Ameur & Nidhaleddine Ben Cheikh & Younes Ben Zaied, 2024. "Politically connected CEOs and risk-taking behaviour: comparative evidence from private and foreign-owned banks in China," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 18(4/5), pages 522-553.
    • Handle: RePEc:ids:ijbget:v:18:y:2024:i:4/5:p:522-553
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