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The Effects of Business Model on Bank’s Stability

Thuy Thu Nguyen, Hai Hong Ho, Duy Van Nguyen, Anh Cam Pham and Trang Thu Nguyen
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Thuy Thu Nguyen: Faculty of Banking and Finance, Foreign Trade University, Hanoi 10000, Vietnam
Hai Hong Ho: Faculty of Business and Economics, Phenikaa University, Hanoi 10000, Vietnam
Duy Van Nguyen: QA Global Co., Hanoi 10000, Vietnam
Anh Cam Pham: School of Economics and International Business, Foreign Trade University, Hanoi 10000, Vietnam
Trang Thu Nguyen: School of Business, Law and Entrepreneurship, Swinburne University of Technology, Melbourne 3122, Australia

IJFS, 2021, vol. 9, issue 3, 1-12

Abstract: The literature shows little evidence of the effects of business models upon the volatility of banks in developing and fast-growing economies. Hence, this study examines the effects of business model choice on the stability of banks in ASEAN countries. Using GMM and other robust econometric methods on the sample of 99 joint stock commercial banks, we find significant and negative impacts of a diversification model in which banks shift toward non-interest and fees-based activities. We also find that the impacts are different between two groups of countries. For Vietnam, Indonesia and the Philippines, the diversification entails negative impacts on stability while demonstrating positive impacts for Thailand and Malaysia. Based on these findings, we draw policy implications for more sustainable development in the ASEAN banking business.

Keywords: bank business model; bank stability; bank risk; ASEAN; Vietnam (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2021
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