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The risk governance paradox in GCC banks: unveiling the roles of risk disclosure and fintech on performance for conventional and Islamic banks
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DOI：10.1108/jfra-07-2024-0405.png)
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Abstract
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<jats:sec>
<jats:title>Purpose</jats:title>
<jats:p>This paper aims to examine the effect of risk governance (RG) on bank performance and investigates whether risk disclosure and FinTech development influence the relationship between RG and bank performance.</jats:p>
</jats:sec>
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<jats:title>Design/methodology/approach</jats:title>
<jats:p>This study examines a sample of 58 commercial banks in the Gulf Cooperation Council (GCC) countries from 2013 to 2022. Structural equation modeling and the generalized least squares technique are used as the primary empirical methodologies. To ensure robustness, the findings are validated using alternative methodologies, including the two-stage least squares technique and the two-step system Generalized Method of Moments, along with alternative measures for RG, performance, risk disclosure and FinTech development.</jats:p>
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<jats:title>Findings</jats:title>
<jats:p>The empirical findings indicate the existence of a negative link between RG and bank performance and that this relationship is mediated by risk disclosure and moderated by FinTech development. However, a notable distinction emerges between conventional and Islamic banks, alongside significant differences based on bank size and the level of RG practices.</jats:p>
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<jats:title>Originality/value</jats:title>
<jats:p>Considering the lack of research in this area, to the best of the author’s knowledge, this paper is the first to open a debate about how RG impacts bank performance in GCC countries. By using a large sample of conventional and Islamic banks, this study highlights the importance of risk disclosure and FinTech development that should be taken into consideration during the implementation of a RG structure.</jats:p>
</jats:sec>
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