This paper investigates the impact of ownership structure, measured by two dimensions: nature of owners and ownership concentration, on bank risk, controlling for country and bank specific traits and other bank regulations. Particularly, it compares risk-taking behaviour of conventional and Islamic banks in 10 MENA countries under three types of bank ownership (family-owned, company-owned and state-owned banks) over the period 2005–2009. The result shows a negative association between ownership concentration and risk. We also find that different categories of shareholders have different risk attitudes. Family-owned banks have incentives to take less risk. State-owned banks display higher risk and have significantly greater proportions of non-performing loans than other banks. By comparing conventional and Islamic banks, the empirical findings show that private Islamic banks are as stable as private conventional banks. However, Islamic banks have a lower exposure to credit risk than conventional banks.
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