Bank diversification, performance and stock market response: Evidence from listed public banks in South Asian countries

    Research output: Contribution to journalArticleResearchpeer-review

    10 Citations (Scopus)

    Abstract

    Our concern in the present paper is with the financial viability of banks in the recently liberalised economies of the South Asian region as they have diversified their revenue and assets bases. To this end, we examine how stock markets have responded to bank diversification in this region over the period start-1999 to end-2012. We find that when banks diversify from interest-only income, they achieve higher market-to-book valuations and improved solvency, but only up to a point, beyond which these performance indicators are negatively associated with higher levels of diversification. It appears that a continued diversification of assets bases away from traditional loan assets does not of itself imply an improved market performance. We explore these issues in the context of four South Asian countries (Bangladesh, India, Pakistan, and Sri Lanka).
    Original languageEnglish
    Pages (from-to)69 - 85
    Number of pages17
    JournalJournal of Asian Economics
    Volume41
    DOIs
    Publication statusPublished - 2015

    Cite this

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    title = "Bank diversification, performance and stock market response: Evidence from listed public banks in South Asian countries",
    abstract = "Our concern in the present paper is with the financial viability of banks in the recently liberalised economies of the South Asian region as they have diversified their revenue and assets bases. To this end, we examine how stock markets have responded to bank diversification in this region over the period start-1999 to end-2012. We find that when banks diversify from interest-only income, they achieve higher market-to-book valuations and improved solvency, but only up to a point, beyond which these performance indicators are negatively associated with higher levels of diversification. It appears that a continued diversification of assets bases away from traditional loan assets does not of itself imply an improved market performance. We explore these issues in the context of four South Asian countries (Bangladesh, India, Pakistan, and Sri Lanka).",
    author = "Piyadasa Edirisuriya and Abeyratna Gunasekarage and Dempsey, {Michael Joseph}",
    year = "2015",
    doi = "10.1016/j.asieco.2015.09.003",
    language = "English",
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    pages = "69 -- 85",
    journal = "Journal of Asian Economics",
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    Bank diversification, performance and stock market response: Evidence from listed public banks in South Asian countries. / Edirisuriya, Piyadasa; Gunasekarage, Abeyratna; Dempsey, Michael Joseph.

    In: Journal of Asian Economics, Vol. 41, 2015, p. 69 - 85.

    Research output: Contribution to journalArticleResearchpeer-review

    TY - JOUR

    T1 - Bank diversification, performance and stock market response: Evidence from listed public banks in South Asian countries

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    AU - Gunasekarage, Abeyratna

    AU - Dempsey, Michael Joseph

    PY - 2015

    Y1 - 2015

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    AB - Our concern in the present paper is with the financial viability of banks in the recently liberalised economies of the South Asian region as they have diversified their revenue and assets bases. To this end, we examine how stock markets have responded to bank diversification in this region over the period start-1999 to end-2012. We find that when banks diversify from interest-only income, they achieve higher market-to-book valuations and improved solvency, but only up to a point, beyond which these performance indicators are negatively associated with higher levels of diversification. It appears that a continued diversification of assets bases away from traditional loan assets does not of itself imply an improved market performance. We explore these issues in the context of four South Asian countries (Bangladesh, India, Pakistan, and Sri Lanka).

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