Bank performance and noninterest income: evidence from countries in the Asian region
Article
Antao, S. and Karnik, A. 2022. Bank performance and noninterest income: evidence from countries in the Asian region. Asia-Pacific Financial Markets. 29 (3), pp. 477-505. https://doi.org/10.1007/s10690-021-09357-1
Type | Article |
---|---|
Title | Bank performance and noninterest income: evidence from countries in the Asian region |
Authors | Antao, S. and Karnik, A. |
Abstract | Noninterest income (NII) is income generated by banks from sources other than interest payments. Studies conducted on the relationship between NII and bank risk for the USA and Europe have found that emphasis on income diversification lowers risk in European banks but exacerbates it in American banks. Current research on Asian banks has not led to a coherent view of the relationship between NII and bank risk. We employ data over 25 years for 24 Asian countries to examine this relationship. Using the GMM estimation approach we estimate equations for two time-periods, 1996–2007 and 2008–2018, to examine the NII-bank risk relationship in the presence of some controlling financial, macroeconomic and policy variables. Our results show that non-interest income worsens bank risk for all 24 countries as well as for sub-groups of countries. We also find that, by and large, economic growth improves bank risk while inflation above a threshold worsens it. Finally, our proxy measure for monetary policy improves bank risk though fiscal policy seems to have no effect. |
Keywords | Noninterest income, Bank performance, Asia–Pacific region, GMM estimation, Determinants of bank risk, ZSCORE |
Publisher | Springer |
Journal | Asia-Pacific Financial Markets |
ISSN | 1387-2834 |
Electronic | 1573-6946 |
Publication dates | |
Online | 12 Jan 2022 |
30 Sep 2022 | |
Publication process dates | |
Deposited | 09 Aug 2022 |
Accepted | 26 Dec 2021 |
Output status | Published |
Publisher's version | License |
Copyright Statement | © The Author(s) 2022 |
Digital Object Identifier (DOI) | https://doi.org/10.1007/s10690-021-09357-1 |
Language | English |
https://repository.mdx.ac.uk/item/89y0v
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