Abstract:

Although risk oversight committee has been mandatory for Indonesian banking industry since 2006, there has never been any inquiry trying to understand how the characteristics of risk oversight committee members may impact their tolerance towards bank management risk-taking. Specifically, this research is aimed to shades light on how young age, female, and risk management experience characteristics of each members affect their inclination towards accommodating bank risk-taking. The study uses panel data random effect regression for unique dataset of 27 banks from 2012-2016 and find that contrary to popular belief, increasing number of younger members reduce accommodation to bank risk-taking. Moreover, increasing female members composition is proven to rise bank risk-taking. These results are different with increasing proportion of risk management experienced committee members as they are proven to have no significant effect towards bank risk-taking behavior. Additionally, sensitivity tests conducted using average age as young indicator and loosening risk management experience criteria by including previous risk oversight committee experience prove that these characteristics are not impacting bank risk- taking. However, presence of female members in risk oversight committee have significant impact on improving accommodation to bank risk-taking.