Market Power, Revenue Diversification and Bank Stability: Evidence from Selected South Asian Countries

Nguyеn, My; Skully, Michael T.; Perera, Shrimal

doi:10.2139/ssrn.1949550

Cited by 19 publications

(35 citation statements)

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“…Nguyen et al . (,b) find that at a lower degree of market power, banks did target revenue diversification more during the 1998–2008 period for some selected Asian countries. Lin et al .…”

Section: Resultsmentioning

confidence: 99%

“…As another work during the same period, Nguyen et al . () focus on four South Asian banking markets (Bangladesh, India, Pakistan, and Sri Lanka), indicating 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.…”

Section: Introductionmentioning

confidence: 99%

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How Does Diversification Impact Bank Stability? The Role of Globalization, Regulations, and Governance Environments

Hsieh

Chen

Lee

et al. 2013

Asia-Pac J of Fin Stud

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This paper examines the impact of bank diversification on stability, using bank‐level data for 22 Asian countries over the period from 1995 to 2009. We empirically investigate whether country characteristics, economic structure, regulatory and governance environments, and globalization have affected the degree of banking stability in Asia. This study takes on two measures for banking diversification ‐ asset and income diversities ‐ and adopts a broad set of variables as a proxy for bank stability. We apply dynamic panel data techniques and show different results from the U.S. and Europe. Our results first reveal that in Asia asset diversity is not sufficient enough to improve bank stability. However, bank stability can be enhanced through a strategy of income diversity. Second, a higher degree of globalization decreases bank stability through income diversity, but stability rises through asset diversity. Third, a country with a higher level of corporate governance reduces the agency problem, thus further increasing stability through diversity. Finally, a country with a higher level of economic development will support asset diversity so that banks can obtain higher profit accompanied by lower risk.

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“…Nguyen et al . (,b) find that at a lower degree of market power, banks did target revenue diversification more during the 1998–2008 period for some selected Asian countries. Lin et al .…”

Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

How Does Diversification Impact Bank Stability? The Role of Globalization, Regulations, and Governance Environments

Hsieh

Chen

Lee

et al. 2013

Asia-Pac J of Fin Stud

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show abstract

“…The more diversified the bank is in business activities, the less risk it may incur. Nguyen, Skully, and Perera (2012) also report that South…”

Section: Risk and Competition: The Boone Indicator As The Threshold Vmentioning

confidence: 92%

The interplay between quantitative easing, risk and competition: The case of Japanese banking

Mamatzakis

2018

Financial Market

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“…Financial liberalization allows commercial banks to compete on a wider range of market segments. Across South Asia, banks with higher market power generate less income from non-traditional activities than smaller banks do, and activity restrictions hinder banks' ability to earn non-interest income through revenue diversification strategies (Nguyen, Skully, and Perera 2012). This harms financial innovation, and hence more competition and lower activity restrictions may be useful.…”

Section: Striking the Right Balance Going Forwardmentioning

confidence: 99%

South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

2020

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Some rights reserved 1 2 3 4 23 22 21 20 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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Market Power, Revenue Diversification and Bank Stability: Evidence from Selected South Asian Countries

Cited by 19 publications

References 0 publications

How Does Diversification Impact Bank Stability? The Role of Globalization, Regulations, and Governance Environments

How Does Diversification Impact Bank Stability? The Role of Globalization, Regulations, and Governance Environments

The interplay between quantitative easing, risk and competition: The case of Japanese banking

South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

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