Exploring the adoption of risk governance structures within the Turkish banking field: an institutional theory lens, 2006-2009

Abstract

Purpose- The purpose of this study is to investigate the adoption patterns of transnationally imposed risk governance structures within the Turkish banking field employing an institutional theory perspective. Building on institutional complexity, which stems from the conflict between transnational and national institutional influences, our study examines two different periods where transnational and national institutional arrangements were in relative fit or misfit. Methodology- The methodology of this study includes the analysis of the publicly available panel data of banks. The annual reports of all 15 banks are used to gather the banks’ risk governance, risk management and performance indicators. All the reports are reached from Public Disclosure Platform (www.kap.gov.tr) or the corporate web sites of the banks. Findings- A risk governance index is constructed to measure the varying levels of adoption among the banks, covering the period from 2006 to 2019. According to the findings, the risk governance index may include the dimension of risk committee, the dimension of chief risk officer, the risk appetite framework of the institution, and corporate governance. However, the risk performance of the banks may vary on different indicators. Conclusion- It is uncovered that banks displayed a relatively homogenous adoption pattern during the 2006-2012 period when transnational and national institutional arrangements were in harmony. However, the adoption patterns diverged among banks when national institutional arrangements began to differ from transnational standards starting from 2013. It is also found that the adoption of transnational templates about risk governance did not result in significant performance increases in risk or corporate performance metrics, indicating a ritual adoption behavior by the majority of the banks, which fail or intendedly decline to entrench corresponding practices associated with these templates. Keywords: Risk governance, adoption, institutional field, transnational institutions, banking JEL Codes: D21, G21, G32, L20, M10