Government ownership and bank risk taking:Evidence from banking industry in Taiwan

Abstract

This study explores the relationship between government-owned banks and risk taking Using publicly listed banks in Taiwan from 2007 to 2018 as the sample we find that compared to non-government banks government-owned banks are associated with higher asset and default risk The finding may provide insights as to the effectiveness of regulatory discipline of banks as well as requiring more independent audits and strengthening the internal loan review process Furthermore we analyze the link between ownership structure and risk taking in both government-owned and non-government banks With four categories of shareholders which are assumed to have different risk-taking incentives the finding shows that higher stake of either managers/directors or individual/family investors is significant in explaining bank risk taking In addition institutional investors impose lower exposure to default risk when they hold higher stakes

Date of Award	2019
Original language	English
Supervisor	Tse-Shih Wang (Supervisor)