scholarly journals REVENUE DIVERSIFICATION, PERFORMANCE, AND BANK RISK: EVIDENCE FROM INDONESIA

2016 ◽  
Vol 7 (2) ◽  
Author(s):  
Mutiara Nur Hafidiyah ◽  
Irwan Trinugroho
Keyword(s):  
Commercial Banks ◽  
Joint Venture ◽  
Least Square ◽  
Bank Risk ◽  
Bank Performance ◽  
Revenue Diversification ◽  
Interest Income

<p>This paper examines the effect of revenue diversification on bank performance and bank risk by studying 101 conventional commercial banks in Indonesia over the period of 2010-2014 resulting in 505 observations. By employing panel least square technique, our results show that revenue diversification negatively affects bank performance. Moreover, it is found that diversified banks are riskier than specialized banks. The risk is diminished when state-owned banks diversify their business. Joint venture banks are riskier than other banks when they engage in non-interest income activities.</p>

scholarly journals Revenue Diversification, Risk and Bank Performance of Vietnamese Commercial Banks

2019 ◽  
Vol 12 (3) ◽  
pp. 138 ◽  
Author(s):  
Ngoc Nguyen
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
Transformation Model ◽  
Annual Reports ◽  
Bank Performance ◽  
Method Of Moment ◽  
Revenue Diversification ◽  
Interest Income ◽  
Using Data

In the future, when the process of economic integration in the banking sector is more powerful, and competitive, diversifying revenue is an inevitable and objective trend to help the banks increase profits, minimize risks and improve their competitive position in the system. The research is on the relationship between revenue diversification, risk and bank performance using data from audited financial statements and annual reports of 26 commercial banks listed and unlisted in Vietnam during the period 2010–2018. The research method uses Generalized Method of Moment (GMM) modeling techniques to solve endogenous problems, variance and autocorrelation in the research model. Research results show that diversification negatively impacts profitability and the higher the diversification, the higher the risk of commercial banks. However, the more diversified listed banks, the more increased the bank’s stability. The banks show the weakness and lack of experience of the banking system in developing a reasonable profit transformation model. The revenue diversification of banks is currently passive and moves slowly. Interest income is still the motivation of bank development, boosting profit growth. Growth, as well as the contribution from service activities, is not commensurate with potentials; although there are many positive points, they are not enough to cover risks from net interest income activities.

REVENUE DIVERSIFICATION AND BANKING RISK: DOES THE STATE OWNERSHIP MATTER? EVIDENCE FROM AN EMERGING MARKET

2020 ◽  
Vol 15 (04) ◽  
pp. 2050019
Author(s):  
GIANG THI HUONG VUONG ◽  
MANH HUU NGUYEN
Keyword(s):  
Commercial Banks ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
State Ownership ◽  
The State ◽  
Least Square ◽  
Revenue Diversification ◽  
Income Diversification ◽  
Empirical Results ◽  
Banking Risk

Our paper investigates the influence of state ownership on the linkage between revenue diversification and risk of Vietnam domestic commercial banks in the period 2009–2018. By using the Generalized Method of Moments (GMM) estimation for a dynamic panel model, the empirical results indicate that Vietnamese domestic commercial banks with higher state equity are promoted to take more risks in the revenue diversification process. Our findings are robustly checked by a variety of measures of banking risk, income diversification, and state equity. Empirical results from our dynamic model are not only accordant with the previous findings of Batten and Vo [(2016). Bank risk shifting and diversification in an emerging market. Risk Management, 18(4), 217–235] estimated by Ordinary Least Square (OLS) regression on the positive relationship between banking risk and income diversification in Vietnamese domestic commercial banks but also provide new evidence on the tradeoff relationship between risk-return in the operating strategy of Vietnamese state-owned banks in the post-financial crisis. This paper proposes a framework for evaluating the nexus between revenue diversification and risk from the state ownership aspect in other frontier markets.

scholarly journals Does banking sector performance promote economic growth? Case study of Jordanian commercial banks

2017 ◽  
Vol 15 (2) ◽  
pp. 55-64 ◽  
Author(s):  
Ayman Mansour Khalaf Alkhazaleh
Keyword(s):  
Economic Growth ◽  
Commercial Banks ◽  
Banking Sector ◽  
Positive Association ◽  
Political Stability ◽  
Commercial Banking ◽  
Least Square ◽  
Bank Performance ◽  
Significant Positive Association ◽  
Ordinary Least Square

Spurred by the need to evade possible parameter bias associated with earlier works, this study intended to address the subject of whether performance of commercial banking contributes to economic growth. With the aim of answering this question, the present review concentrates on analyzing the association between profitability, deposit and credit facilities as proxy for performance of commercial banks while gross domestic product proxies economic growth. The population of the study is characterized by the Jordanian banking industry; the study enclosed a period of six years from 2010 to 2015 constructed on the annual report of thirteen chosen banks. Using Ordinary Least Square, the regression outcomes found a significant positive association between measures of bank performance and economic growth. Findings demonstrate that measures of bank performance in particular profitability deposits credits have positive relationship with economic growth as measured by GDP. The empirical results suggest that the policy creators should make arrangements to augment and prompt the banking sector in Jordan on account of its key significance in making and advancing development of the economy. It additionally can be inferred that not only commercial banking performance but also other movables such as political stability and technology may assume essential part in the economic prosperity in Jordan.

Evaluating Loan Loss Provisioning for Non-Performing Loans and Its Impact on the Profitability of Commercial Banks in Bangladesh

2018 ◽  
Vol 2 (2) ◽  
pp. 33-41
Author(s):  
Fakir Tajul Islam
Keyword(s):  
Commercial Banks ◽  
Statistical Significance ◽  
Least Square ◽  
Business Success ◽  
Optimum Level ◽  
Loan Loss ◽  
Independent Variables ◽  
Loan Loss Provision ◽  
Interest Income ◽  
Dependent Variables

Through the collection and disbursement of money, banks often face the risk of default of the loan. These Non-Performing loans (NPLs) should be identified and cared for avoiding vulnerability to other risk. Banks may mitigate this risk using loan loss provisioning (LLP). Using the aggregate data of 56 commercial banks in the last 9 years (2009-2017), this study attempts to evaluate the Impacts of LLP maintained for NPLs on profitability, as it may help to take the level of the LLP, and NPLs in the optimum level of business success.  The dependent variables used in this study are Non-Interest Income to Total Assets and Net-Interest Income to Total Assets as a representative of the profitability of a bank. The dependent variables are analyzed using Least Square Multiple Regression on three independent variables, which were Gross NPL to Total Loans Outstanding, Loan Loss Provision Maintained, and Surplus/ (Shortfall) resulted from the required loan provisioning. The result showed that the profitability is very significantly influenced by the independent variables. NPLs and LLPs maintained by the commercial banks negatively related with the profitability of the business, especially LLPs shown statistical significance to impact on profitability negatively. it is better to take the LLPs and NPLs in the minimum level for maximum profitability of banks.

Effect of China’s Commercial Banks’ Diversified Revenue on Performance

2013 ◽  
Vol 709 ◽  
pp. 752-763
Author(s):  
Yong Qin Deng ◽  
Zhao Yang Li ◽  
Yuan Yi
Keyword(s):  
Negative Correlation ◽  
Commercial Banks ◽  
Positive Impact ◽  
Financial Data ◽  
Economies Of Scope ◽  
Bank Performance ◽  
Interest Income ◽  
Revenue Structure ◽  
Packet Inspection ◽  
The Relationship

The reasons of China's commercial banks developing diversified revenue are analyzed from the theories of financial innovation, diversity theory and economies of scope. The overall and packet inspection has been done to disclose the relationship between diversified revenue and Chinas bank performance by the financial data of 14 commercial banks during the period of 1999 to 2009. The results show that there is a stable positive correlation between non-interest income and banks' performance for all of the commercial banks and state-owned banks, while the proportion of non-interest income has a positive impact on banks' performance in the joint-stock banks, yet diversified income structure shows a negative correlation with performance. Meanwhile it reveals that the proportion of non-interest income and diversified revenue have a lagged effect on banks' performance. Finally some suggestions are given to optimize Chinas commercial banks revenue structure.

The performance of Islamic banking among the commercial banks in Malaysia

2008 ◽  
Vol 5 (1) ◽  
pp. 59
Author(s):  
Samsuwatd Zuha Mohd Abbas ◽  
Norli Ali ◽  
Aminah Mohd Abbas
Keyword(s):  
Commercial Banks ◽  
Positive Impact ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Accounting Performance ◽  
Significant Difference ◽  
The Mean

This paper examines the accounting performance of the Islamic banking among (??) commercial banks in Malaysia. A total of 18 commercial banks which include 4 Islamic banks are selected as samples covering the period of 2000 - 2006. Accounting performance is measured by the return on assets (ROA) and return on equity (ROE). The objective of the study is (1) to determine whether Islamic banking performance is at par with the conventional banking and (2) to investigate whether the type (Islamic or conventional bank) and age of bank influence the performance. Result of the independence t-test of the study shows that there is no significant difference in the performance of the Islamic and the conventional banking in Malaysia although the mean score for conventional banking is higher. The regression results show that the age of banks has a positive impact on the bank performance where as none of the types of banks influence performance.

Internal Control Quality and Bank Risk-Taking and Performance

2020 ◽  
Author(s):  
Matthew Baugh ◽  
Matthew Ege ◽  
Christopher G. Yust
Keyword(s):  
Internal Control ◽  
Risk Taking ◽  
Downside Risk ◽  
Internal Controls ◽  
Bank Risk ◽  
Material Weakness ◽  
Control Quality ◽  
Interest Income ◽  
Upside Risk ◽  
And Performance

Using a sample of bank-years from 2005 to 2017, we examine the effect of internal control quality on future risk-taking and performance. We find that banks that disclose a material weakness in internal controls have higher risk-taking and worse performance in the future, including having a higher (lower) likelihood of experiencing large losses (gains). These findings suggest that weak controls increase (reduce) downside (upside) risk-taking or conversely that strong controls increase (reduce) upside (downside) risk-taking. Path analyses suggest that 22.3 to 43.7 percent of the effect of internal control quality on future performance is through risk-taking. Additionally, material weaknesses are negatively associated with total asset, loan, interest income, and non-interest income growth, suggesting that internal control quality affects both core and non-core activities of banks. Overall, results suggest that strong internal controls improve bank risk-taking, in part through asymmetrically reducing downside risk-taking while facilitating upside risk-taking, ultimately improving bank performance.

scholarly journals Does the target market affect bank performance? Evidence from the geographic diversification of city commercial banks in China

2021 ◽  
Vol 15 (1) ◽  
Author(s):  
Xiaonan Li ◽  
Chang Song
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Bank Performance ◽  
Chinese Government ◽  
Target Market ◽  
Geographic Diversification ◽  
Cross Sectional ◽  
The Impact ◽  
Geographical Diversification

AbstractAfter the opening up of the banking sector to domestic and foreign capitals which is approved by the Chinese government, the China Banking Regulatory Commission (CBRC) has permitted city commercial banks to diversify geographically. Since this deregulation in 2006, city commercial banks began to geographically diversify to occupy the market and acquire more financial resources. To examine the causal relationship between geographical diversification and bank performance, we construct an exogenous geographical diversification instrument using the gravity-deregulation model and a policy shock. We find that bank geographical diversification negatively affects bank performance. Moreover, we conduct some mechanism tests in the Chinese context. We find that the target market with several large- and medium-sized banks and a high level of local protectionism in the target market decreases the performance of city commercial banks. Finally, cross-sectional analyses show that the impact of geographical diversification on banks’ performance is more notable among city commercial banks that are younger, and have a lower capital adequacy ratio and a higher non-performing loan ratio.

scholarly journals A Decision Support Model for Measuring Technological Progress and Productivity Growth: The Case of Commercial Banks in Vietnam

Axioms ◽  
2021 ◽  
Vol 10 (3) ◽  
pp. 131
Author(s):  
Chia-Nan Wang ◽  
Ngoc-Ai-Thy Nguyen ◽  
Thanh-Tuan Dang ◽  
Thi-Thuy-Quynh Trinh
Keyword(s):  
Productivity Growth ◽  
Commercial Banks ◽  
Banking System ◽  
Bank Performance ◽  
Net Income ◽  
Decision Support Model ◽  
Bottom Line ◽  
Window Analysis ◽  
Dea Models ◽  
Managerial Implications

The interactive relationship between the banking system and enterprise makes up the role that affects a national economy. Significantly, the relationship between banking and technology has become tighter over the past few decades. An assessment of bank performance is critical for understanding their position and provides valuable information to practitioners. In this paper, we assess the performance of the top 18 commercial banks in Vietnam during 2015–2019. The assessment utilizes two data envelopment analysis (DEA) models while involving the banks’ performance in six dimensions, including assets, deposits, operating expenses, liabilities as inputs, while treating loans and net income as outputs. Using the Malmquist measurement, the total productivity growth indexes of the banks are obtained, which are decomposed into technical and technological evolutions. Window analysis is used to compute the efficiencies of the banks in every single year in 2015–2019. From the results of Malmquist, most banks are found to decrease their Malmquist productivity indexes from 2015 to 2019, wherein both of their technical and technological indexes declined. Window analysis indicates B6-SHBank, B1-Vietinbank, and B18-PetrolimexGroup as the most efficient banks during 2015–2019, and in the interim, B16-BaoVietBank, B11-NationalCitizen, and B13-VietnamMaritime ranked on the bottom line. The managerial implications of this research help to reflect the comprehensive insights of the top Vietnamese commercial bank performance and offer a strategic guideline for decision-makers toward sustainable development in the banking industry.

Sign in / Sign up

Export Citation Format

Share Document