Joint Effect of Banking Competition and Risk-Taking on Profitability: Evidence from ASEAN’s Countries

Soebyakto, Bambang Bemby; Muthia, Fida; Adam, Mohamad; Muizzuddin, Muizzuddin

doi:10.2991/aebmr.k.200520.073

Cited by 2 publications

(7 citation statements)

References 7 publications

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“…This result could be interpreted a a higher inflation level reduced the value of loans over the years, which strengthened the borrower's repayment capacity, thus increasing the stability of banks, which drove the Z-score up and the overall risk fell. The findings of many related studies reinforce this result (Ghenimi et al 2017;Abbas et al 2021;Soebyakto et al 2020;Pham et al 2021). However, it contradicts the results of other studies that state inflation and Z-score are negatively related (Ghassan and Guendouz 2019;De-Ramon et al 2020;Rahman et al 2021).…”

Section: The Significance Of Country-specific and Bank-specific On Ov...supporting

confidence: 55%

“…Inflation Rate: A number of related studies concluded that inflation has a negative effect on banks' Z-scores (Ghassan and Guendouz 2019;De-Ramon et al 2020;Rahman et al 2021). Nevertheless, other studies (Ghenimi et al 2017;Abbas et al 2021;Soebyakto et al 2020;Pham et al 2021) concluded that inflation and Z-score are positively associated.…”

Section: Country-specific Variablesmentioning

confidence: 92%

“…These authors have argued that when countries face inflationary pressures, they weaken the borrowers' repayment capacities, and, thus, the credit risk rises and leads to a rise in the overall risk of the bank, and, thereby, the Z-score decreases. On the other hand, some studies (Ghenimi et al 2017;Abbas et al 2021;Soebyakto et al 2020;Pham et al 2021) have stated that inflation and Z-score are positively related. Hamdi and Hakimi (2019) have stated that inflation has no significant effect on overall bank risks.…”

Section: Country-specific Variablesmentioning

confidence: 98%

“…(1) Operating Efficiency. Studies in the literature have concluded that operating efficiency has a positive impact on overall bank risks (Imbierowicz and Rauch 2014;Ghenimi et al 2017;Chen 2018;Ghassan and Guendouz 2019;De-Ramon et al 2020;Soebyakto et al 2020;Rahman et al 2021). These authors have justified their views by arguing that a higher level of operating efficiency implies that the banks have sound management in administrating internal costs.…”

Section: Bank-specific Variablesmentioning

confidence: 99%

“…It is the cost of servicing and monitoring transactions. It can be noted that operating efficiency has a positive impact on the overall bank risks (Imbierowicz and Rauch 2014;Ghenimi et al 2017;Chen 2018;Ghassan and Guendouz 2019;De-Ramon et al 2020;Soebyakto et al 2020;Rahman et al 2021). According to different studies, the cost-income ratio measures efficiency (Ghosh 2017;Hamdi and Hakimi 2019;Rahman et al 2021).…”

Section: Bank-specific Variablesmentioning

confidence: 99%

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The Robustness of the Determinants of Overall Bank Risks in the MENA Region

Eldomiaty

Youssef

Mahrous

2022

JRFM

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Purpose: The banking sector in the MENA region is exposed to financial risks that originate from both the internal and external environment. Related studies in the literature have reached inconclusive determinants of the overall risks to banks. This paper examines the robustness of the determinants cited in the related literature. Design/methodology/approach: This paper examines the country-specific and bank-specific factors that affect banks’ Z-score (being a proxy for the overall bank risks) in the MENA region. The sample banks consist of 33 listed commercial banks operating in six countries in the MENA region. Balanced panel data over 20 years (2000 to 2020) was examined, having a total of 660 observations. The Pooled Ordinary Least Square estimation (OLS) was used to carry out the empirical analysis. Findings: The findings of this paper showed that the robust determinants of overall bank risks are follows: (a) The unemployment rate had a negative effect on high overall bank risks in the period 2000–2010, (b) The financial crisis had a positive effect on the MENA overall bank risks in the period 2000–2010, but only for the low overall bank risks, (c) A robust and negative effect of cost/income ratio was observed in the period 2010–2020 only for high overall bank risk, (d) Low overall-risk banks were able to manage overall risks in a shorter time than high overall bank risks, and (e) In terms of the country-wide effect, the results for Egypt only showed that the overall bank risk had positive effects in the period 2000–2010, but negative and significant effects in the period 2011–2020 where overall bank risks reduced. Originality: This paper offers robust findings in the controversy around the determinants of overall bank risks in the MENA region, which is beneficial in light of the fact that the literature thus far has not reached a consensus regarding this issue.

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Section: The Significance Of Country-specific and Bank-specific On Ov...supporting

confidence: 55%

Section: Country-specific Variablesmentioning

confidence: 92%

Section: Country-specific Variablesmentioning

confidence: 98%

Section: Bank-specific Variablesmentioning

confidence: 99%

Section: Bank-specific Variablesmentioning

confidence: 99%

See 3 more Smart Citations

The Robustness of the Determinants of Overall Bank Risks in the MENA Region

Eldomiaty

Youssef

Mahrous

2022

JRFM

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Pengaruh Modal Kerja terhadap Profitabilitas pada Perbankan di Negara Kawasan Asia Tenggara

Resa Seftiandini,

Isni Andriana,

Kemas M. Husni Thamrin

2024

AJEKBS

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This study aims to determine the effect of working capital on profitability in banking Southeast Asian countries. The type of data used is secondary data. Data collection techniques in this research used documentation studies and literature studies. The data obtained from the documentation study is a dataset from Moody's Analytics BankFocus and documents. All financial data used in this research is expressed in USD units. The population in this study are six countries operating in Southeast Asian countries in 2017-2022 totaling 295 banks using a purposive sampling technique. The sample used was 63 banks in the Philippines, Indonesia, Malaysia, Singapore, Thailand and Vietnam. The data analysis technique used is multiple linear regression analysis using SPSS version 2.6 software. The results showed that the debtor collection period (DCP) had no effect, the creditor payment period (CPP) had a significant positive effect, the cash conversion cycle (CCC) had no effect, and the banking ratio (BR) had a significant positive effect on net profit margin.

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Joint Effect of Banking Competition and Risk-Taking on Profitability: Evidence from ASEAN’s Countries

Cited by 2 publications

References 7 publications

The Robustness of the Determinants of Overall Bank Risks in the MENA Region

The Robustness of the Determinants of Overall Bank Risks in the MENA Region

Pengaruh Modal Kerja terhadap Profitabilitas pada Perbankan di Negara Kawasan Asia Tenggara

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