This paper presents empirical evidence on the different impacts of principal-agent relationships on risk-taking behavior and performance of Islamic banks, compared to conventional ones, for a sample of 105 banks in 8 Arab countries during the period (2005 – 2009). It distinguishes between two aspects of shareholder structure; namely, ownership concentration and shareholders rights. Empirical evidence showed that principal-agent conflicts were proved prominent in Islamic, as well as conventional banks due to the inverse and statistically significant effect of shareholder rights on risk-taking behavior. Moreover, it was found that principal-agent conflicts are more inherent in conventional banks, with regard to their impact on performance. The results were robust to including different bank specific and country specific variables.
Topics in Middle Eastern and North African Economies
Middle East Economic Association and Loyola University Chicago
Fayed, Mona and Ezzat, Asmaa, "Do principal-agent conflicts impact performance and risk-taking behavior of Islamic banks?". Topics in Middle Eastern and North African Economies, electronic journal, 19, 2, Middle East Economic Association and Loyola University Chicago, 2017, http://www.luc.edu/orgs/meea/
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.
© 2017 The Authors