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Risk governance, banks affiliated to business groups, and foreign ownership

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  • Rubén Chavarín

    (CUCEA-Universidad de Guadalajara)

Abstract

The aim of the present work is to study the effect of risk governance on the profitability of a sample of listed banks in Mexico during the period 2007–2015. The evidence presented here shows that functions of risk governance have an impact of only slight significance on the profitability of banks, which suggests that the dispositions and recommendations for risk governance are only fulfilled in a limited way. One possible explanation for this finding is related to patterns of ownership structure, due to the presence of banks linked to business groups, that give risk management a secondary role while other objectives are given greater emphasis. However, in foreign-owned banks also there were no patterns very different from the previous ones. The results suggest that the effective size of the risk committee and the independence of the chair of this committee are the only relevant risk governance mechanisms in commercial banks established in Mexico.

Suggested Citation

  • Rubén Chavarín, 2020. "Risk governance, banks affiliated to business groups, and foreign ownership," Risk Management, Palgrave Macmillan, vol. 22(1), pages 1-37, March.
    • Handle: RePEc:pal:risman:v:22:y:2020:i:1:d:10.1057_s41283-019-00049-9
    DOI: 10.1057/s41283-019-00049-9
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    More about this item

    Keywords

    Risk governance; Bank profitability; Business groups; Emerging markets;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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