In this paper, we analyze the risk-taking behavior of banks in emergingeconomies in a context of international capital mobility. Our paper highlightsa new channel through which depositors can exercise pressure tocontrol risk-taking. Depositors can reallocate their savings away fromtheir home country to the more protective system of a developed economy.We recover a classical result according to which increased competitionresulting from more international financial openness induces banksto take excessive risks. We find however that sufficiently high financialopenness is necessary for a positive link between financial transparencyand safe risk management. Finally, we test the relationship between disclosure,financial openness and bank risk-taking for a panel of 258banks from the MENA region and Turkey.
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