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Do competition and development indicators heterogeneously affect risk and capital? Evidence from Asian banks

Afsana Yesmin ()
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Afsana Yesmin: Department of Business Administration, Premier University, Chittagong, Bangladesh

International Journal of Financial Engineering (IJFE), 2018, vol. 05, issue 03, 1-18

Abstract: The global crisis and increased competition have become increasingly essential issues in the risk and capital concern of banks. This study delves the effect of development indicators and market competition over the Asian banking industry. The robust generalized methods of moments (GMM) and two-stage least square (TSLS) estimated results of 191 Asian banks for 2000–2014 depict the significant impact of development indicators and competition over risk and capital of Asian banks. The findings of the study also show the substantial positive effect of inflations in regulatory capital, whereas the risk of banks is significantly reduced in the economic progression. Increase risk level act as a striking force of capital escalation which is consistent with the Basel accord and capitalized banks provokes managerial efficiency in managing risk than low capitalized counterparts.

Keywords: Regulatory capital; market competition; development indicators; GMM (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S2424786318500172

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