Income diversification and bank risk in Asia Pacific |
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Institution: | 1. School of Business, Macau University of Science and Technology, Taipa, Macau, China;1. Department of Banking and Finance, Monash University, PO Box 197, Caulfield East 3145, VIC, Australia;2. School of Economics, Finance and Marketing, RMIT University, Melbourne, VIC, Australia;1. High Institute of Management, University of Sousse, Tunisia;2. High Institute of Commercial Studies, University of Sousse, Tunisia |
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Abstract: | This paper investigates the effect of income diversification on bank risk for a large sample of commercial banks in 14 Asia Pacific economies over the period 2011–2016. Using a dynamic panel data model with a system generalized methodof moments estimator, we find that banks with a higher level of income diversification are less risky in general. We further consider both developed and emerging economies according to the International Monetary Fund's classification of the level of economic development. Specifically, for emerging economies, the results indicate that banks with a higher level of income diversification face less risk. However, the diversification of commercial bank income has no significant impact on bank risk in developed Asia Pacific economies. |
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Keywords: | Asia Pacific region Income diversification Bank risk Regulation G21 G28 G32 |
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