Bustaman, Yosman and Ekaputra, I.A. and Prijadi, R. and Husodo, Z.A. (2016) Impact of Loan Portfolio Diversification and Income Diversification on Interest Margin in ASEAN Banking Market. Pertanika Journal of Social Sciences and Humanities, 24. pp. 193-204. ISSN 0128-7702
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Abstract
This study aims to investigate the impact of loan portfolio diversification and income diversification in ASEAN-4 banking markets. Loan portfolio diversification consists of credit to different sectors and different types of credit offered to customers. This study applied a model of bank as a dealer, initiated by Ho and Saunders (1981), and the latest developed by Maudos and Solis (2009). We employed static and also dynamic panel data using System Generalised Method of Moment (System GMM) to estimate the model. The results show a decreasing trend in banks’ net interest margins, which is consistent with the increase in selling of bank non-traditional products in this market that indicates the existence of cross-subsidy in revenue from non-traditional to traditional banking products. In addition, less diversification in credit sectors positively and significantly affects net interest margin. Furthermore, we also found that lesser competition, as well as foreign bank penetration, will end up with a significant decrease in NIM.
| Item Type: | Article |
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| Uncontrolled Keywords: | ASEAN; Foreign Bank Penetration; Market Power; Loan Portfolio Diversification; Net Interest Margin; Non-Interest Income Diversification |
| Subjects: | H Social Sciences > HG Finance H Social Sciences > HG Finance > HG1501-3550 Banking H Social Sciences > HG Finance > HG3691-3769 Credit. Debt. Loans |
| Divisions: | Faculty of Business Administration and Communication > Department of Accounting |
| Depositing User: | Maria Lamury |
| Date Deposited: | 11 Sep 2020 13:30 |
| Last Modified: | 24 Sep 2020 15:18 |
| URI: | http://repository.sgu.ac.id/id/eprint/1762 |
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