Does the country’s institutional quality enhance the role of risk governance in preventing bank risk?

ABSTRACT

This study investigates the relationship between risk governance effectiveness and bank risk at different levels of institutional quality. We find that risk governance effectiveness negatively affects bank risk and this relationship is stronger in countries with higher institutional quality. This indicates that risk governance can prevent bank risk more effectively in countries with greater institutional quality.

KEYWORDS:

• Institutional quality
• risk governance
• insolvency risk
• credit risk
• operational risk

JEL CLASSIFICATION:

• G10
• G12
• G32

Author contributions

Quang Khai Nguyen: Conceptualization, Formal analysis, Investigation, Methodology, Resources, Writing – original draft, Writing – review & editing.

Van Cuong Dang: Data curation.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This research is fund by the University of Economics Ho Chi Minh City