Bank Risk-Taking During COVID-19: The Role of Private and Public Ownership in GCC

This study explores the ownership–risk relationship in the GCC emerging economies during the COVID-19 pandemic, examining 44 commercial banks classified as private and publicly owned banks. The two-stage least squares (2SLS) method is employed to identify endogeneity issues, with robustness checks using panel data techniques. We analyzed the ownership–risk relationship, including non-linear and interaction effects. The results reveal that public ownership exhibits an inverted U-shaped relationship with NPLs, where moderate public concentration increases credit risk, while high public control marginally reduces it. Private ownership is linked to higher risk once bank-specific characteristics are controlled, reflecting riskier lending driven by profitability motives. We show that public banks demonstrate resilience due to stable deposits and implicit backing, whereas private banks are more vulnerable to systemic shocks. The impact of ownership structure on credit risk is context-dependent, reflecting heterogeneous ownership objectives in the GCC.