This paper analyses empirically the determinants of risk-taking in Tunisian commercial banks, with special emphasis on the ownership structure, the acceptance of government officials on bank's boards, the capital adequacy requirements and the franchise value. The sample used comprised ten commercial banks for the period from 1997 to 2006. In 1999, the Central Bank of Tunisia increased the minimum capital requirements for the banking industry vis-à-vis risk-weighted assets to 8%, along the lines proposed by the Basel Committee on Banking Supervision. We find that the key component of Basel I-capital adequacy requirements does not affect bank risk-taking. The acceptance of government officials on banks' boards reduces bank risk. The relationship between the managerial holdings and total and firm specific risk is non-linear; the risk increases initially with the ownership by managers, and then decreases as the effect of managerial entrenchment dominates the effects of interest alignment on bank risk. In contrast, systematic risk was unrelated to ownership. The franchise value does not affect bank risk. Finally, robustness tests examining the shareholder monitoring hypothesis and the substitution hypothesis yield results inconsistent with the argument that regulation (an external governance mechanism) and shareholder monitoring (an internal governance mechanism) are substitutes for one another.