Reference : Empirical Evidence on the Market Power, Business Model, Banking Stability and Perform...
Scientific journals : Article
Business & economic sciences : Finance
Empirical Evidence on the Market Power, Business Model, Banking Stability and Performance in the Emerging Economies
Yudha Sudrajad, Oktofa mailto [Université de Liège - ULiège > HEC Liège > > >]
Hübner, Georges mailto [Université de Liège - ULiège > HEC Liège : UER > Gestion financière >]
In press
Eurasian Business Review
[en] Lerner Index ; bank business model ; bank stability
[en] This paper studies the nexus between banks’ market power and business model represented by non-interest income and non-deposit short-term funding share. We also examine the impact of bank business model on banking stability and performance. We use a sample made up with six ASEAN country banking sectors from 2002 to 2015. We find that banks with a strong capital base but lower net interest margin perform better in translating their market power to generate non-traditional income as alternative soruce of revenues. Our findings also show that the implementation of Basel 2 Accord encourages banks to create non-interest income from trading & derivatives activities. We also document that banks with higher market power tend to increase non-deposit short-term funding in their banking scheme. In the evaluation of the banking stability, our results suggest that banks with greater non-traditional income are associated with less banking overall risk. Moreover, non-traditional incomes also contribute to better bank performance.
Researchers ; Professionals

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