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The Role of Internal Risk Governance in Improving Bank Performance: A Theoretical Perspective
- 1 Segi University, Malaysia
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Abstract
Internal risk governance is a critical determinant of bank performance, influencing stability and profitability within a complex and dynamic financial environment. This study examines the mechanisms by which internal risk governance affects the performance of Chinese city commercial banks (CCBs) through the lenses of Principal-Agent Theory and Risk Management Theory. Specifically, the research explores the interplay among internal governance, capital regulation pressures, ownership concentration, income diversification, and risk-taking behavior. The findings reveal that enhanced internal risk governance mitigates risk-taking behaviors, thereby improving bank performance. Conversely, increased capital regulation pressures and higher ownership concentration are linked to elevated risk-taking and reduced performance. Additionally, income diversification is shown to decrease risk-taking while positively impacting bank performance. This study provides new insights into the theoretical and practical dimensions of risk management, offering implications for strategic decision-making, regulatory oversight, and policy formulation aimed at strengthening the resilience of city commercial banks.
Keywords
Internal Risk Governance, Bank Performance, Risk-Taking Behavior, City Commercial Banks (CCBs)
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Cite this article
Mu,Q. (2025). The Role of Internal Risk Governance in Improving Bank Performance: A Theoretical Perspective. Advances in Economics, Management and Political Sciences,156,21-28.
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Volume title: Proceedings of the 4th International Conference on Business and Policy Studies
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