The determinants of Enterprise Risk Management in the Moroccan Banking sector

Abstract

This article explores the growing importance of risk management in both academic and professional spheres, particularly in the banking sector where poor risk management can have serious global economic consequences. With regulatory requirements increasing and evolving consumer expectations and technology transforming the way companies work, the concept of Enterprise Risk Management (ERM) has gained significant interest as an effective response to these challenges. However, the best measure of ERM and the characteristics of companies implementing ERM effectively are still being debated. By adopting a contingency based approach, this study focuses on the contingent factors that determine the degree of ERM implementation in the Moroccan banking industry using a robust measure of ERM based on public disclosures and a panel data framework covering the period between 2007 and 2021. In line with previous studies, the findings indicate that banks with higher ERM implementation tend to be larger, more diversified, and highly leveraged, and that regulatory pressure contributes to the expansion of ERM practices. The article concludes by highlighting the need for more consistent and detailed risk management disclosures in the future.