Corporate Governance, Ownership Structure and Gender Diversity in Bank Risk-Taking Behavior in Ghana

Author(s):

 Alhassan Musah^a*, Abigail Padi^a and Dennis Baah^b

alaye88@gmail.com / alhassan.musah@ttu.edu.gh
2024-07-31 07:59:58

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Abstract

This study examined the effect of corporate governance structures such as board size, board independence and board chairperson independence on bank risk-taking behavior. The study also examined the effect of ownership structures such as managerial ownership, government ownership and foreign ownership and gender diversity on the board on bank risk-taking behavior with control variables such as bank size, bank profitability and bank liquidity included in the model. The study sampled 15 commercial banks over the last 10-year period and measured bank risk-taking behavior using the z-scores of the banks in line with previous studies. The result of the study showed that both board size and board independence as well as board chairperson independence were significant determinants of bank risk-taking behavior. Whiles board size and its independence increase bank risk-taking behavior; board chairperson independence reduces bank risk-taking behavior. On the ownership structure, both government ownership and foreign ownership are significant determinants of bank risk-taking behavior whiles managerial ownership is not. Whiles government ownership increases bank risk-taking behavior, foreign ownership reduces bank risk-taking behavior. Finally, female representation on the board increase bank risk-taking behavior. The control variables of bank size, bank liquidity and bank profitability were all significant determinants of bank risk-taking behavior. The study has significant implication for policy makers and bank owners who want to manage the level of risk-taking by banks in Ghana.

Keywords
Corporate governance; Ownership structure; Gender diversity; Risk taking, Banks

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