The effects of business model on bank's stability

The literature shows little evidence of the effects of business models upon the volatility of banks in developing and fast-growing economies. Hence, this study examines the effects of business model choice on the stability of banks in ASEAN countries. Using GMM and other robust econometric methods o...

Full description

Saved in:
Bibliographic Details
Published in:International journal of financial studies 2021-09, Vol.9 (3), p.1-12
Main Authors: Nguyen, Thuy Thu, Ho, Hai Hong, Nguyen, Duy Van, Pham, Anh Cam, Nguyen, Trang Thu
Format: Article
Language:English
Subjects:
ASEAN
bank business model
bank risk
bank stability
Banking industry
Banks
Business models
Causality
Diversification
Economic growth
International banking
Profitability
Vietnam
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The literature shows little evidence of the effects of business models upon the volatility of banks in developing and fast-growing economies. Hence, this study examines the effects of business model choice on the stability of banks in ASEAN countries. Using GMM and other robust econometric methods on the sample of 99 joint stock commercial banks, we find significant and negative impacts of a diversification model in which banks shift toward non-interest and fees-based activities. We also find that the impacts are different between two groups of countries. For Vietnam, Indonesia and the Philippines, the diversification entails negative impacts on stability while demonstrating positive impacts for Thailand and Malaysia. Based on these findings, we draw policy implications for more sustainable development in the ASEAN banking business.
ISSN:2227-7072
2227-7072
DOI:10.3390/ijfs9030046