Determinants of Banks’ Risk-Taking Behaviours in Africa: A Regulatory Perspective ()
ABSTRACT
The intermediation role of banks between borrowers
and savers exposes them to various risks which impact their risk appetite and
behaviour. Using annual panel data for the period 2010 to 2019, this paper
examines the determinants of risk-taking behaviours of banks within the African
context. The study sampled 45 listed banks from African nations that have
adopted the Basel III regulatory requirements and used the random effect
estimator to fit the static panel data models established for the study. The
study shows that minimum capital requirements, capital buffer premium and
profitability were significant determinants of the risk-taking behaviour of the
African banks. However, compared to other variables, the minimum capital
requirement remained the most important factor in terms of determining the
risk-taking behaviour of the selected African banks. This is because the
minimum capital requirement determining measure is more significant across the
three measures of the risk-taking behaviour of the African banks compared to
others. The study recommends that African banks should establish risk limits,
improve risk identification, and establish a platform for bank stress testing
by using the key determinants of risk-taking behaviour in making strategic
business decisions.
Share and Cite:
Obadire, A. and Obadire, K. (2023) Determinants of Banks’ Risk-Taking Behaviours in Africa: A Regulatory Perspective.
Open Journal of Business and Management,
11, 673-687. doi:
10.4236/ojbm.2023.112036.
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