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

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  • Nguyen, My
  • Skully, Michael
  • Perera, Shrimal

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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 23 (2012)
Issue (Month): 6 ()
Pages: 688-700

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Handle: RePEc:eee:asieco:v:23:y:2012:i:6:p:688-700

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Web page: http://www.elsevier.com/locate/asieco

Related research

Keywords: Market power; Revenue diversification; ASEAN; Lerner index;

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References

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Cited by:
  1. Samantas, Ioannis, 2013. "Income-specific estimates of competition in European banking," MPRA Paper 51098, University Library of Munich, Germany.

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