The impact of supervision on bank risk: empirical evidence from the Tunisian context

IF 3.8 Q2 BUSINESS EuroMed Journal of Business Pub Date : 2023-09-29 DOI:10.1108/emjb-01-2023-0006
Sana Belgacem, Manel Hadriche, Fethi Belhaj
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Abstract

Purpose The purpose of this paper is to examine the impact of supervision on banking risk to determine whether prudential measures taken especially after financial crises are effective in limiting banking risks. Design/methodology/approach The empirical study focused on 210 annual reports of almost all Tunisian banks during the 2010–2019 period. Banking supervision effectiveness is measured by enforcement outputs (i.e. on-site audits and sanctions). The generalized least squares method of multivariate analysis was used to analyze this study. Findings The results show that supervision set up and on-site audits reduce bank risk, while the relationship between sanctions and risk appears to be non-significant. The results still hold after robustness tests by changing the bank's risk-taking indicators. Practical implications This study has important implications for managers and investors in the Tunisian context. In particular, the findings provide microevidence for the impact of supervision in Tunisian banks to reduce their risk-taking. The empirical results have important implications for the decision-making of bank managers and regulators in Tunisia as well as for relevant actors in similar emerging economies. Originality/value This study extends the previous literature on supervision by examining the relationship between supervision and banking risk in an emerging country, which has been little explored, Tunisia in particular. Furthermore, this study examines whether supervision reduces risk borne by Tunisian banks, and to the best of the researchers' knowledge, it is one of the pioneering studies of supervision in the Tunisian market. This latter market has different economic, political and social attributes compared to developed countries. So, this paper helps to clarify the impact of supervision enforcement and macroprudential policies. In addition, this paper strongly contributes to the various stakeholders “understanding of the importance and implication of supervision practices. However, since banks tend not to reduce their participation in risky activities to seek higher profits, supervisory policymakers and practitioners should also take a closer look at the composition of banks” investment portfolios to reduce moral hazard and regulatory arbitrage behavior. Empirically, the authors measure supervision by on-site audits and sanctions and examine how they affect bank risk level, which was never approached in Tunisia.
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监管对银行风险的影响:来自突尼斯背景的经验证据
本文的目的是检验监管对银行风险的影响,以确定特别是在金融危机后采取的审慎措施是否有效地限制了银行风险。该实证研究侧重于2010-2019年期间几乎所有突尼斯银行的210份年度报告。银行监管的有效性是通过执行产出(即现场审计和制裁)来衡量的。采用多元分析的广义最小二乘法对本研究进行分析。结果表明,监管设置和现场审计降低了银行风险,而制裁与风险之间的关系不显著。在通过改变银行的风险承担指标进行稳健性测试后,结果仍然成立。本研究对突尼斯的管理者和投资者具有重要意义。特别是,研究结果为突尼斯银行监管对减少其冒险行为的影响提供了微观证据。实证结果对突尼斯银行经理和监管机构的决策以及类似新兴经济体的相关行为者具有重要意义。本研究通过考察一个新兴国家(尤其是突尼斯)的监管与银行风险之间的关系,扩展了之前关于监管的文献。此外,本研究考察了监管是否降低了突尼斯银行承担的风险,据研究人员所知,这是突尼斯市场监管的开创性研究之一。与发达国家相比,后者的市场具有不同的经济、政治和社会属性。因此,本文有助于厘清监管执法和宏观审慎政策的影响。此外,本文还有助于各利益相关者理解监督实践的重要性和含义。然而,由于银行往往不会为了追求更高的利润而减少对风险活动的参与,监管政策制定者和从业者也应该密切关注银行投资组合的构成,以减少道德风险和监管套利行为。从经验上看,作者通过现场审计和制裁来衡量监管,并研究了它们如何影响银行风险水平,这在突尼斯从未接触过。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
9.80
自引率
19.20%
发文量
61
期刊介绍: The EuroMed Journal of Business (EMJB) is the premier publication facilitating dialogue among researchers from Europe and the Mediterranean. It plays a vital role in generating and disseminating knowledge about various business environments and trends in this region. By offering an up-to-date overview of emerging business practices in specific countries, EMJB serves as a valuable resource for its readers. As the official journal of the EuroMed Academy of Business, EMJB is committed to reflecting the economic growth seen in the European-Mediterranean region. It aims to be a focused and targeted business journal, highlighting environmental opportunities, threats, and marketplace developments in the area. Through its efforts, EMJB promotes collaboration and open dialogue among diverse research cultures and practices. EMJB serves as a platform for debating and disseminating research findings, new research areas and techniques, conceptual developments, and practical applications across various business segments. It seeks to provide a forum for discussing new ideas in business, including theory, practice, and the issues that arise within the field.
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