Corporate risk disclosure of Islamic and сonventional banks

  • Released On
    Thursday, 26 October 2017
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/bbs.12(3-1).2017.09
  • Article Info
    Volume 12 2017, Issue #3, pp. 247-256
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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

This study examines the degree of the corporate risk disclosure and its impact on the banking performance using annual data of banks listed on the UAE financial markets: Abu Dhabi Stock Exchange (ADX) and Dubai Financial Market (DFM) during the period 2003–2013. The authors conduct the content analysis of the annual reports to measure the degree of the corporate risk disclosure. In addition, they use the panel data regressions to analyze the impact of the corporate risk disclosure on the performance of the banks. The results show low degree of the overall corporate risk disclosure index, strategic risk disclosure index, operational risk disclosure index, damage risk disclosure index, and risk management disclosure index for UAE listed banks. In addition, the results reveal significant differences in the overall corporate risk disclosure, strategic risk disclosure, financial risk disclosure, and risk management disclosure between conventional and Islamic banks. However, the effect of the degree of the overall corporate risk disclosure on the performance of UAE bank has been found insignificant. The findings of this paper contribute by providing a better understanding of risk disclosure practices in UAE and help the banks to optimally disclose their risk, improve the quality of their disclosure practices and enhance the quality of their financial reports. The impact of the corporate risk disclosure on the performance of the banks has not been examined by any of the prior researches. In addition, this paper examines the potential difference between Islamic and conventional banks in their corporate risk disclosure practices.

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    • Table 1. Empirical studies on the CRD
    • Table 2. Strategic risk disclosure
    • Table 3. Operational risk disclosure
    • Table 4. Financial risks disclosure
    • Table 5. Damage risks disclosure
    • Table 6. Risk management disclosure
    • Table 7. Control variables
    • Table 8. Banking performance
    • Table 9. Levels of corporate risk disclosure of UAE banks
    • Table 10. Mann-Whitney test of corporate risk disclosure indices of UAE conventional and Islamic banks
    • Table 11. Results of robust dynamic panel-data two-steps GMM system estimation of overall corporate risk disclosure index