Diversification, Competition, Regulations, and Bank Risk-Taking: Evidence from Asian Commercial Banks

• Main Authors: Chang, Ya-Ching, 張雅晴
• Other Authors: CHIEN, MING-CHE
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/76067576872969613181

碩士 === 國立臺北大學 === 經濟學系 === 102 === This study utilizes the Panel Data Analysis to 445 commercial banks of 10 Asian countries for the period of 2004-2012 to analyze the effects of diversification, competition, and regulations on bank risk-taking. Z-score, non-performing loan ratio, and liquidity ratio are used to measure bankruptcy, credit, and liquidity risk of bank, respectively. Major findings of the study are as follows. First, income diversification can significantly reduce the bankruptcy risk, but not the credit and liquidity risk, while asset diversification can significantly reduce the liquidity risk, but not the bankruptcy and credit risk. Results above indicate that income or asset diversification may not necessarily lead to a lower risk-taking by banks, especially for the credit risk. Therefore, banks involving some more nontraditional and/or off-balance-sheet activities may be necessary in the future. Second, bank regulations represented by better quality of regulation, higher degree of financial trust, and stricter requirements of capital adequacy will lead to lower bank risk-taking, while market concentration has significantly positive effect on bank risk. Results indicate that government regulation and market competitiveness will induce bank to have a lower risk-taking. Lastly, by further investigating the income and asset diversification effects on bankruptcy risk among periods of before, during, and after the financial crisis, we find that bankruptcy risk is reduced significantly the most by diversification in the period of before crisis, followed by the period of during and then after the financial crisis. However, no significantly different effect of diversification on bankruptcy risk is found between commercial banks on developed and developing countries in Asia.