Abstract:

The debate on the impact of corporate governance frameworks on bank performance is still ongoing and the large empirical literature on the association between them is still inconclusive. This study exploits a dynamic GMM system on a sample of 150 banks operating in 15 MENA countries between 2009 and 2020. The empirical results show that larger board, lower proportion of external directors, higher gender diversity, CEO-chairperson roles separation, and the existence of a board level risk committee all improve MENA bank financial stability. Similar results have been found for controlling risk-taking by the management. Furthermore, the results show that better institutional quality can indeed promote the positive impact of corporate governance on bank stability. The findings of this study suggest allowing a higher cap on the size of boards of directors. Secondly, the appointment of independent directors should be based on experience and expertise, and the role of independent directors should be promoted. Thirdly, higher gender diversity must be encouraged and maybe even regulated. A separation between CEO and board chair roles is crucial in order to minimise potential conflicts of interest. Based on the empirical findings, the authors recommend certain implications to improve banking stability.

Keywords:

Corporate Governance framework. Bank stability. Bank Risk-taking. MENA Region.

How to Cite:

Haitham El-Labban, Chawki El-Moussawi and Josse Roussel. Corporate Governance, Banking Stability and Risk Taking of MENA Banks. [ref]: vol.23.2025. available at: https://refpress.org/ref-vol23-a15