Market power, revenue diversification and bank stability: Evidence from selected South Asian countries

My Nguyen, Michael Skully and Shrimal Perera

Journal of International Financial Markets, Institutions and Money, 2012, vol. 22, issue 4, 897-912

Abstract: We investigate the association between bank market power and revenue diversification and whether revenue diversification interacts with market power impacting on individual bank stability. These issues are explored in the context of four South Asian banking markets (Bangladesh, India, Pakistan and Sri Lanka) during 1998–2008. Our Generalised Methods of Moments (GMM) estimators indicate that South Asian banks with greater market power focus more on traditional interest income generating activities. Such banks, however, become more stable when they diversify across both interest- and non-interest income activities.

Keywords: Market power; Bank stability; Revenue diversification; South Asian; Lerner index (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (79)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:22:y:2012:i:4:p:897-912

DOI: 10.1016/j.intfin.2012.05.008

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