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

My Nguyen, Michael Skully, Shrimal Perera

Research output: Contribution to journalArticlepeer-review

77 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)897-912
Number of pages16
JournalJournal of International Financial Markets, Institutions and Money
Volume22
Issue number4
DOIs
Publication statusPublished - 6 Jul 2012
Externally publishedYes

Keywords

  • Bank stability
  • Lerner index
  • Market power
  • Revenue diversification
  • South Asian

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