Risk governance and regulatory adjustments in the public commercial banks of OECD

Abstract

<div><h3><br></h3><h3>Purpose<br></h3><p>This study aims to explore the relationship between risk governance characteristics (chief risk officer [CRO], chief financial officer [CFO] and senior directors [SENIOR]) and regulatory adjustments (RAs) in Organization for Economic Cooperation and Development public commercial banks.</p></div><div><h3>Design/methodology/approach</h3><p>Using principal component analysis (PCA) and regression models, the research analyzes a representative data set of these banks.</p></div><div><h3>Findings</h3><p>A significant negative correlation between risk governance characteristics and RAs is found. Sensitivity analysis on the regulatory Tier 1 capital ratio and the total capital ratio indicates mixed outcomes, suggesting a complex relationship that warrants further exploration.</p></div><div><h3>Research limitations/implications</h3><p>The study’s limited sample size calls for further research to confirm findings and explore risk governance’s impact on banks’ capital structures.</p></div><div><h3>Practical implications<br></h3><p>Enhanced risk governance could reduce RAs, influencing banking policy.</p></div><div><h3>Social implications</h3><p>The study advocates for improved banking regulatory practices, potentially increasing sector stability and public trust.</p></div><div><h3>Originality/value</h3><p>This study contributes to understanding risk governance’s role in regulatory compliance, offering insights for policymaking in banking.</p></div><p> <br></p>