Bank Risk and Non-Interest Income Activities in the Indonesian Banking Industry
AbstractThe recent trend of product diversification in the Indonesian banking industry underscores the importance of non-interest income activities. This study examines the relationship between product diversification and bank risk over the period of 2002-2008. Our analysis shows clear evidence that the effect of product diversification on bank risk depends highly on the bankfs asset size. Specifically, the degree of product diversification is negatively associated with bank risk for small-sized banks. Conversely, the degree of product diversification is positively related to bank risk for large-sized banks. This finding suggests that deregulation encouraging banks to become more involved in non-traditional activities may have an adverse effect on the overall banking system where large-sized banks are playing a significant role in Indonesia.
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Bibliographic InfoPaper provided by Research Institute, International University of Japan in its series Working Papers with number EMS_2012_03.
Length: 25 pages
Date of creation: Apr 2012
Date of revision:
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More information through EDIRC
Bank risk; Product diversification; Non-interest income activities;
Other versions of this item:
- Hidayat, Wahyu Yuwana & Kakinaka, Makoto & Miyamoto, Hiroaki, 2012. "Bank risk and non-interest income activities in the Indonesian banking industry," Journal of Asian Economics, Elsevier, vol. 23(4), pages 335-343.
- NEP-ALL-2012-04-23 (All new papers)
- NEP-BAN-2012-04-23 (Banking)
- NEP-RMG-2012-04-23 (Risk Management)
- NEP-SEA-2012-04-23 (South East Asia)
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