Bank performance and noninterest income: evidence from countries in the Asian region

Antao, Sherika and Karnik, Ajit ORCID logoORCID: (2022) Bank performance and noninterest income: evidence from countries in the Asian region. Asia-Pacific Financial Markets, 29 (3) . pp. 477-505. ISSN 1387-2834 [Article] (doi:10.1007/s10690-021-09357-1)

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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.

Item Type: Article
Keywords (uncontrolled): Noninterest income, Bank performance, Asia–Pacific region, GMM estimation, Determinants of bank risk, ZSCORE
Research Areas: A. > Business School
Item ID: 35520
Notes on copyright: © The Author(s) 2022
Open Access: This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit
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Depositing User: Jisc Publications Router
Date Deposited: 09 Aug 2022 09:26
Last Modified: 17 Feb 2023 15:00

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