Title: Politically connected CEOs and risk-taking behaviour: comparative evidence from private and foreign-owned banks in China

Authors: Haithem Awijen; Hachmi Ben Ameur; Nidhaleddine Ben Cheikh; Younes Ben Zaied

Addresses: INSEEC Grande École, Omnes Education Group, Paris, France ' INSEEC Grande École, Omnes Education Group, Paris, France ' ESSCA School of Management, 1 Rue Joseph Lakanal, 49000 Angers, France ' EDC Paris Business School, 74-80 Rue Roque de Fillol, 92800 Puteaux, France

Abstract: This study investigates the effect of CEOs' political connections on the risk-taking behaviour of banks in China over the period 2003-2017. Using both credit and insolvency risk measures, we show that political connections have a positive effect on banks' risk-taking behaviour. Bank ownership structure also positively moderates the relationship between political connections and risk-taking. Our empirical results have important policy implications for investors and the government. We highlight the importance of CEOs' political connections, which potentially play a role in determining a bank's risk-taking behaviour. Finally, our results are robust to alternative bank risk and ownership variables.

Keywords: political connections; bank risk-taking; ownership structure; ownership concentration; China.

DOI: 10.1504/IJBGE.2024.139638

International Journal of Business Governance and Ethics, 2024 Vol.18 No.4/5, pp.522 - 553

Received: 20 Jul 2022
Accepted: 05 Jan 2023
Published online: 05 Jul 2024 *

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