Bank market power and revenue diversification: Evidence from selected ASEAN countries

    Research output: Contribution to journalArticleResearchpeer-review

    20 Citations (Scopus)

    Abstract

    This paper examines the association between bank market power and revenue diversification using a sample of 153 commercial banks from five Association of Southeast Asian Nations (ASEAN) member countries (Indonesia, Malaysia, the Philippines, Thailand and Vietnam). We find a non-linear relationship between bank market power and revenue diversification, where at lower degrees of market power (in loan and deposit markets) banks concentrate on revenue diversification. In contrast, those with greater market power focus more on traditional interest-based products. Our findings also indicate that credit losses experienced earlier, during and after the Asian financial crisis have encouraged ASEAN banks to diversify into non-traditional activities to compensate for their excessive losses. When the markets recovered and loan demand increased, however, traditional interest-based business has become more important. These results remain consistent across all models providing robust results.
    Original languageEnglish
    Pages (from-to)688 - 700
    Number of pages13
    JournalJournal of Asian Economics
    Volume23
    Issue number6
    DOIs
    Publication statusPublished - 2012

    Cite this

    @article{cdc79c004fa040d9a9506ffac8871ee4,
    title = "Bank market power and revenue diversification: Evidence from selected ASEAN countries",
    abstract = "This paper examines the association between bank market power and revenue diversification using a sample of 153 commercial banks from five Association of Southeast Asian Nations (ASEAN) member countries (Indonesia, Malaysia, the Philippines, Thailand and Vietnam). We find a non-linear relationship between bank market power and revenue diversification, where at lower degrees of market power (in loan and deposit markets) banks concentrate on revenue diversification. In contrast, those with greater market power focus more on traditional interest-based products. Our findings also indicate that credit losses experienced earlier, during and after the Asian financial crisis have encouraged ASEAN banks to diversify into non-traditional activities to compensate for their excessive losses. When the markets recovered and loan demand increased, however, traditional interest-based business has become more important. These results remain consistent across all models providing robust results.",
    author = "Nguyen, {Thi Ngoc My} and Skully, {Michael Thomas} and Perera, {Gangadawila H Shrimal R}",
    year = "2012",
    doi = "10.1016/j.asieco.2012.08.004",
    language = "English",
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    pages = "688 -- 700",
    journal = "Journal of Asian Economics",
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    }

    Bank market power and revenue diversification: Evidence from selected ASEAN countries. / Nguyen, Thi Ngoc My; Skully, Michael Thomas; Perera, Gangadawila H Shrimal R.

    In: Journal of Asian Economics, Vol. 23, No. 6, 2012, p. 688 - 700.

    Research output: Contribution to journalArticleResearchpeer-review

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    AU - Perera, Gangadawila H Shrimal R

    PY - 2012

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    AB - This paper examines the association between bank market power and revenue diversification using a sample of 153 commercial banks from five Association of Southeast Asian Nations (ASEAN) member countries (Indonesia, Malaysia, the Philippines, Thailand and Vietnam). We find a non-linear relationship between bank market power and revenue diversification, where at lower degrees of market power (in loan and deposit markets) banks concentrate on revenue diversification. In contrast, those with greater market power focus more on traditional interest-based products. Our findings also indicate that credit losses experienced earlier, during and after the Asian financial crisis have encouraged ASEAN banks to diversify into non-traditional activities to compensate for their excessive losses. When the markets recovered and loan demand increased, however, traditional interest-based business has become more important. These results remain consistent across all models providing robust results.

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