Modeling the Determinants of Firm Value of Conventional Banks: Empirical Evidence from ASEAN-5 Countries

• Main Authors: Olalere, Oluwaseyi Ebenezer, Islam, Md. Aminul, Yusoff, Wan Sallha, Mumu, Fahmida Emaran
• Format: text
• Published: Animo Repository 2021
• Subjects: firm value; bank-specific factors; macroeconomic factors; profitability; Southeast Asian
• Online Access: https://animorepository.dlsu.edu.ph/apssr/vol21/iss3/10; https://animorepository.dlsu.edu.ph/context/apssr/article/1390/viewcontent/RA_209.pdf
• Institution: De La Salle University

This study systematically investigated the determinants of the firm value of conventional banks in Southeast Asian countries. The panel data technique used was based on the data extracted from 63 commercial banks over nine years (2009–2017), with 567 observations. The empirical results revealed that capital adequacy and asset quality had a significant positive impact on the firm value of banks. Meanwhile, the liquid asset ratio and deposit ratio have a significant and positive effect on firm value, and the efficiency ratio had a significant and negative impact on firm value. On the other hand, the Herfindahl-Hirschman Index and bank size have a significant negative effect on firm value, whereas the firm value is not affected by diversification, gross domestic product (GDP) growth, and inflation rate. The study provides the implication that bank management and policymakers focus on the importance of macroeconomic policies. Priority should be given to policies that can control inflation and as well foster financial intermediation. Hence, further study should include government changes and industry concentration, oil shocks, and financial structure.