Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan

This study examines the moderating effect of risk committee on the relationship between risk management and financial stability in Pakistan. Risk management is represented by risk factors, bank’s capital regulation and governance factors, whereas financial stability is measured by ROA and ZROE. Usin...

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Main Author:	Kamran, Hafiz Waqas
Format:	Thesis
Language:	eng eng
Published:	2020
Subjects:	HD61 Risk Management HG Finance
Online Access:	https://etd.uum.edu.my/10325/1/permission%20to%20deposit-grant%20the%20permission-902673.pdf https://etd.uum.edu.my/10325/2/s902673_01.pdf
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id	my-uum-etd.10325
record_format	uketd_dc
spelling	my-uum-etd.103252023-03-01T04:16:04Z Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan 2020 Kamran, Hafiz Waqas Mohamed Arshad, Shamsul Bahrain Omran, Abdelnaser School of Economics, Finance & Banking School of Economics, Finance and Banking HD61 Risk Management HG Finance This study examines the moderating effect of risk committee on the relationship between risk management and financial stability in Pakistan. Risk management is represented by risk factors, bank’s capital regulation and governance factors, whereas financial stability is measured by ROA and ZROE. Using a sample of 28 commercial banks in Pakistan during 2007-2016, the research hypotheses are tested under panel regression models. The results show significant negative impacts of risk factors as measured by credit risk, operational risk, country risk and financial crisis on both ROA and ZROE. This signifies that the increasing trend in the risks would undermine financial stability. Conversely, governance factor of corruption control shows an adverse influence on ZROE, indicating that higher corruption creates greater instability. Meanwhile, political stability, absence of violence, government effectiveness, and voice and accountability have significant positive impacts on ZROE. The results imply, good governance could increase the banking sector financial stability. The results show a negative moderating effect of risk committee on the relationship between risk factors and ROA, indicating that higher involvement of risk committee adversely influenced the risk factors on ROA leading to lower financial stability. In contrast, capital regulation as measured by capital adequacy ratio is positively moderated with ROA, indicating stronger financial stability. Similar results are observed for ZROE that further confirmed the evidence. However, risk committee strengthens the negative relationship between market risk and ZROE, hence depressing the financial stability. The findings of the study provide insight to policy makers regarding the importance of risk committee in making strategic decisions. It is also suggested that representatives of the commercial banks should consider the above-mentioned risk factors for the betterment of the financial stability. 2020 Thesis https://etd.uum.edu.my/10325/ https://etd.uum.edu.my/10325/1/permission%20to%20deposit-grant%20the%20permission-902673.pdf text eng staffonly https://etd.uum.edu.my/10325/2/s902673_01.pdf text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Mohamed Arshad, Shamsul Bahrain Omran, Abdelnaser
topic	HD61 Risk Management HG Finance
spellingShingle	HD61 Risk Management HG Finance Kamran, Hafiz Waqas Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan
description	This study examines the moderating effect of risk committee on the relationship between risk management and financial stability in Pakistan. Risk management is represented by risk factors, bank’s capital regulation and governance factors, whereas financial stability is measured by ROA and ZROE. Using a sample of 28 commercial banks in Pakistan during 2007-2016, the research hypotheses are tested under panel regression models. The results show significant negative impacts of risk factors as measured by credit risk, operational risk, country risk and financial crisis on both ROA and ZROE. This signifies that the increasing trend in the risks would undermine financial stability. Conversely, governance factor of corruption control shows an adverse influence on ZROE, indicating that higher corruption creates greater instability. Meanwhile, political stability, absence of violence, government effectiveness, and voice and accountability have significant positive impacts on ZROE. The results imply, good governance could increase the banking sector financial stability. The results show a negative moderating effect of risk committee on the relationship between risk factors and ROA, indicating that higher involvement of risk committee adversely influenced the risk factors on ROA leading to lower financial stability. In contrast, capital regulation as measured by capital adequacy ratio is positively moderated with ROA, indicating stronger financial stability. Similar results are observed for ZROE that further confirmed the evidence. However, risk committee strengthens the negative relationship between market risk and ZROE, hence depressing the financial stability. The findings of the study provide insight to policy makers regarding the importance of risk committee in making strategic decisions. It is also suggested that representatives of the commercial banks should consider the above-mentioned risk factors for the betterment of the financial stability.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Kamran, Hafiz Waqas
author_facet	Kamran, Hafiz Waqas
author_sort	Kamran, Hafiz Waqas
title	Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan
title_short	Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan
title_full	Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan
title_fullStr	Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan
title_full_unstemmed	Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan
title_sort	moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of pakistan
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2020
url	https://etd.uum.edu.my/10325/1/permission%20to%20deposit-grant%20the%20permission-902673.pdf https://etd.uum.edu.my/10325/2/s902673_01.pdf
_version_	1776103791442001920

Moderating effect of risk committee on the relationship between risk management and financial stability in commercial banks of Pakistan

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