Market power, revenue diversification and bank stability: Evidence from selected South Asian countries

Thi Ngoc My Nguyen, Michael Thomas Skully, Gangodawila H Shrimal R Perera

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    We investigate the association between bank market power and revenue diversification and whether revenue diversification interacts with market power impacting on individual bank stability. These issues are explored in the context of four South Asian banking markets (Bangladesh, India, Pakistan and Sri Lanka) during 1998-2008. Our Generalised Methods of Moments (GMM) estimators indicate that South Asian banks with greater market power focus more on traditional interest income generating activities. Such banks, however, become more stable when they diversify across both interest- and non-interest income activities.
    Original languageEnglish
    Pages (from-to)897 - 912
    Number of pages16
    JournalJournal of International Financial Markets, Institutions and Money
    Issue number4
    Publication statusPublished - 2012

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