Bank diversification and its impact on bank performance: Evidence from tiger cub economies

• Main Authors: Chua, Gwyneth Elrica S., Montilla, Jessa Maria Chella R., Ramos, Mica Ella L., Surposa, Jeazzir Kline V.
• Format: text
• Language: English
• Published: Animo Repository 2015
• Subjects: Banks and banking > Southeast Asia > Case studies; Finance > Southeast Asia > Case studies; Diversification in industry > Southeast Asia; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18370
• Institution: De La Salle University

This study investigated the effect of diversification on the performance of selected top banks from the tiger cub economies which are the Philippines, Indonesia, Thailand, Malaysia, from the years 2009 to 2013. We defined diversification, total assets were classified into total loans and total assets in financial investments total loans were classified further into corporate loans and non-corporate loans. This research paper used a Herfindahl-Hirschman index to calculate for focus which is the inverse function of diversification. We also employed nonlinear regression and the fixed effect model for endogeneity of data. Our results suggested that loan diversification is associated positively with bank performance (increase bank returns) while asset diversification is associated negatively with bank performance (Turkmen, Yigit, 2012)