Trade Openness and Bank Risk-Taking Behavior: Evidence from Emerging Economies

Ashraf, Badar Nadeem; Arshad, Sidra; Liang, Yan

doi:10.3390/jrfm10030015

Cited by 34 publications

(44 citation statements)

References 62 publications

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“…Effective ERM practices help to reply to unexpected threats, to ensure flexibility and to take the benefits of opportunities which in turn facilitate firms to gain competitive advantage (Armeanu et al 2017). It is doubtless that organizations with risk-related practices can smooth their income volatility and decrease the impact of financial crises to enhance their performance (Ashraf et al 2017). Meanwhile, especially in SMEs, top management needs to have enough financial knowledge to smooth operation in the dynamic markets (Bongomin et al 2017).…”

Section: (Committee Of Sponsoring Organizations Of the Treadway Commimentioning

confidence: 99%

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Yang

Ishtiaq

Anwar

2018

JRFM

167

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In the current turbulent market, firms spend lots of tangible and intangible resources to gain competitive advantage and superior performance. Prior studies have discussed several determinants of competitive advantage and performance, particularly in developed economies, whereas small-and medium-sized enterprises (SMEs) in emerging economies have received minor attention. This study examines the mediating role of competitive advantage between enterprise risk management practices and SME performance and the moderating role of financial literacy between enterprise risk management practices and competitive advantage. A structured questionnaire is used to collect data from 304 SMEs operating in the emerging market of Pakistan. The hypotheses of the proposed study are tested through Structural Equation Modeling (SEM) in Analysis of a Moment Structures (AMOS). The results indicate that enterprise risk management practices significantly influence competitive advantage and SME performance. Competitive advantage partially mediates the relationship between enterprise risk management practices and SME performance. Additionally, financial literacy significantly moderates the relationship between enterprise risk management practices and competitive advantage. Firms are advised to implement formal enterprise risk management practices to gain competitive advantage and superior performance. Top managers need to have enough financial education that they will be able to perform risk management practices in an efficient way to gain a competitive position in the market. Implications for practices have been discussed in detail.

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Section: (Committee Of Sponsoring Organizations Of the Treadway Commimentioning

confidence: 99%

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Yang

Ishtiaq

Anwar

2018

JRFM

167

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“…Higher trade openness decreases bank risk taking, thereby, overall risk in the economy. The trade openness provides diversification opportunities to banks in lending activities, which decrease overall bank risk (Ashraf, Arshad and Yan ).…”

Section: Data and Variables Descriptionsmentioning

confidence: 99%

Monetary Policy and Financial Stability: The Role of Inflation Targeting

Sethi¹,

Acharya²

2019

Australian Economic Review

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This article examines the relationship between Inflation targeting (IT) and financial instability from 1990 to 2015 for Asian economies. To measure financial instability, a multidimensional financial conditioning index is calculated following the ECB's approach. Using a fixed effects panel data model the study finds that adoption of IT policy in Asian economies has an adverse impact on financial stability, thus rejecting the ‘conventional wisdom’ hypothesis. Further, the Vector Autoregression (VAR) result shows that an IT regime increases housing returns and encourages investors to take higher risks.

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“…They find that commercial banks reduce asset portfolio risk in response to stringent risk-based capital requirements. Ashraf et al (2017) study the effect of trade openness on bank risk-taking behavior using a sample of 291 banks from 37 emerging markets. The results suggest that higher trade openness diminishes bank risk-taking.…”

Section: Capital Adequacy and Bank Riskmentioning

confidence: 99%

Capital Adequacy, Deposit Insurance, and the Effect of Their Interaction on Bank Risk

Jumreornvong

Chakreyavanich²,

Treepongkaruna

et al. 2018

JRFM

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This paper investigates how deposit insurance and capital adequacy affect bank risk for five developed and nine emerging markets over the period of 1992–2015. Although full coverage of deposit insurance induces moral hazard by banks, deposit insurance is still an effective tool, especially during the time of crisis. On the contrary, capital adequacy by itself does not effectively perform the monitoring role and leads to the asset substitution problem. Implementing the safety nets of both deposit insurance and capital adequacy together could be a sustainable financial architecture. Immediate-effect analysis reveals that the interplay between deposit insurance and capital adequacy is indispensable for banking system stability.

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Trade Openness and Bank Risk-Taking Behavior: Evidence from Emerging Economies

Cited by 34 publications

References 62 publications

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Monetary Policy and Financial Stability: The Role of Inflation Targeting

Capital Adequacy, Deposit Insurance, and the Effect of Their Interaction on Bank Risk

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