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

My Nguyen, Michael Skully and Shrimal Perera

Journal of Asian Economics, 2012, vol. 23, issue 6, 688-700

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.

Keywords: Market power; Revenue diversification; ASEAN; Lerner index (search for similar items in EconPapers)
JEL-codes: C33 G21 G28 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (73)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:23:y:2012:i:6:p:688-700

DOI: 10.1016/j.asieco.2012.08.004

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