EconPapers    
Economics at your fingertips  
 

Profitability of the Korean Banking Sector: Panel Evidence on Bank-Specific and Macroeconomic Determinants

Fadzlan Sufian ()

Journal of Economics and Management, 2011, vol. 7, issue 1, 43-72

Abstract: The paper analyzes the profitability of banks in Korea, while controlling for a wide array of bank specific and macroeconomic determinants. We find that Korean banks with lower liquidity levels tend to exhibit higher profitability. Furthermore, higher diversification regarding banks' income sources towards derivative instruments and other fee-based activities shows a positive effect. The impacts of credit risk and overhead costs are always negative whether we control for the macroeconomic and financial conditions or not. Business cycle effects, particularly inflation, display a substantial pro-cyclical impact on bank profitability. The industry concentration of the national banking system positively and significantly affects bank performance. The impact of the Asian financial crisis is negative, while Korean banks have been relatively more profitable during the pre-crisis compared to the post-crisis period.

Keywords: banks; profitability; financial crisis; Korea (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
http://www.jem.org.tw/content/pdf/Vol.7No.1/03.pdf (application/pdf)
http://www.jem.org.tw/content/abstract/Vol.7No.1/English/03.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jec:journl:v:7:y:2011:i:1:p:43-72

Access Statistics for this article

Journal of Economics and Management is currently edited by Cathy W. S. Chen and Shih-Wen Hu

More articles in Journal of Economics and Management from College of Business, Feng Chia University, Taiwan Contact information at EDIRC.
Bibliographic data for series maintained by Yi-Ju Su ().

 
Page updated 2019-08-20
Handle: RePEc:jec:journl:v:7:y:2011:i:1:p:43-72