IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0316949.html
   My bibliography  Save this article

Income diversification and liquidity risk in ASEAN-5 banks: A Bayesian perspective

Author

Listed:
  • Quynh Nga Duong
  • Nguyen Thuy Khue Tran
  • Thi Phuong Thao Dang

Abstract

Our research employed Bayesian linear regression utilizing an adaptive Metropolis-Hastings method with Gibbs sampling to assess the influence of bank income diversification on the liquidity risk of five ASEAN banks. The results indicate a positive relationship between bank liquidity risk and income diversification, as well as loan interest rates. This implies that banks with greater income diversification tend to have higher liquidity ratios and reduce the bank risk and conversely. Therefore, the study suggests that banks should enhance their diversification efforts to mitigate their liquidity risk

Suggested Citation

  • Quynh Nga Duong & Nguyen Thuy Khue Tran & Thi Phuong Thao Dang, 2025. "Income diversification and liquidity risk in ASEAN-5 banks: A Bayesian perspective," PLOS ONE, Public Library of Science, vol. 20(3), pages 1-12, March.
    • Handle: RePEc:plo:pone00:0316949
    DOI: 10.1371/journal.pone.0316949
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0316949
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0316949&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0316949?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Michael Brei & Claudio Borio & Leonardo Gambacorta, 2020. "Bank intermediation activity in a low‐interest‐rate environment," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 49(2), July.
    2. Meslier, Céline & Tacneng, Ruth & Tarazi, Amine, 2014. "Is bank income diversification beneficial? Evidence from an emerging economy," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 97-126.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gambacorta, Leonardo & Oliviero, Tommaso & Shin, Hyun Song, 2020. "Low price-to-book ratios and bank dividend payout policies," CEPR Discussion Papers 15615, C.E.P.R. Discussion Papers.
    2. Anupam Das Gupta & Syed Moudud-Ul-Huq, 2020. "Do competition and revenue diversification have significant effect on risk-taking? Empirical evidence from BRICS banks," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-28, March.
    3. Botta, Alberto & Caverzasi, Eugenio & Russo, Alberto, 2024. "Same old song: On the macroeconomic and distributional effects of leaving a Low Interest Rate Environment," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 552-570.
    4. Velasco, Pilar, 2022. "Is bank diversification a linking channel between regulatory capital and bank value?," The British Accounting Review, Elsevier, vol. 54(4).
    5. Matěj Kuc & Petr Teplý, 2023. "Are European commercial banks more profitable than cooperative banks? Evidence from a low interest rate environment," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4385-4400, October.
    6. Bilgin, Mehmet Huseyin & Danisman, Gamze Ozturk & Demir, Ender & Tarazi, Amine, 2021. "Economic uncertainty and bank stability: Conventional vs. Islamic banking," Journal of Financial Stability, Elsevier, vol. 56(C).
    7. Haykel Zouaoui & Faten Zoghlami, 2023. "What do we know about the impact of income diversification on bank performance? A systematic literature review," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(3), pages 286-309, September.
    8. Nguyen, Thi Lam Anh, 2018. "Diversification and bank efficiency in six ASEAN countries," Global Finance Journal, Elsevier, vol. 37(C), pages 57-78.
    9. Finaldi Russo, Paolo & Nigro, Valentina & Pastorelli, Sabrina, 2024. "Bank lending to small firms: Metamorphosis of a financing model," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 13-31.
    10. Ion Lapteacru, 2019. "Do bank activities and funding strategies of foreign and state‐owned banks have a differential effect on risk‐taking in Central and Eastern Europe?," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 27(2), pages 541-576, February.
    11. Bats, Joost V. & Giuliodori, Massimo & Houben, Aerdt C.F.J., 2023. "Monetary policy effects in times of negative interest rates: What do bank stock prices tell us?," Journal of Financial Intermediation, Elsevier, vol. 53(C).
    12. Thanh Pham Thien Nguyen & Son Hong Nghiem & Eduardo Roca, 2016. "Management Behaviour in Vietnamese Commercial Banks," Australian Economic Papers, Wiley Blackwell, vol. 55(4), pages 345-367, December.
    13. Tom Beernaert & Nicolas Soenen & Rudi Vander Vennet, 2023. "ECB Monetary Policy and the Term Structure of Bank Default Risk," JRFM, MDPI, vol. 16(12), pages 1-22, December.
    14. Vijay Kumar & Sanjeev Acharya & Ly T. H. Ho, 2020. "Does Monetary Policy Influence the Profitability of Banks in New Zealand?," IJFS, MDPI, vol. 8(2), pages 1-17, June.
    15. Nguyen, James & Parsons, Richard & Argyle, Bronson, 2021. "An examination of diversification on bank profitability and insolvency risk in 28 financially liberalized markets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    16. Mirzaei, Ali & Pasiouras, Fotios & Samet, Anis, 2021. "State ownership, macroprudential policies, and bank lending," Journal of International Money and Finance, Elsevier, vol. 117(C).
    17. Pankaj Sinha & Naina Grover, 2021. "Interrelationship Among Competition, Diversification and Liquidity Creation: Evidence from Indian Banks," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(2), pages 183-204, May.
    18. Gulati, Rachita & Singh, Nirmal & Kumar, Sunil & Duppati, Geeta, 2023. "Bank stability in the Indian subcontinent region: Evolution and determinants," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    19. Gaganis, Chrysovalantis & Galariotis, Emilios & Pasiouras, Fotios & Staikouras, Christos, 2020. "Bank profit efficiency and financial consumer protection policies," Journal of Business Research, Elsevier, vol. 118(C), pages 98-116.
    20. Bang Nam Jeon & Ji Wu & Limei Chen & Minghua Chen, 2020. "Diversification, efficiency and risk of banks: New consolidating evidence from emerging economies," School of Economics Working Paper Series 2020-10, LeBow College of Business, Drexel University.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0316949. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.