Do the business cycle and revenue diversification matter for banks' capital buffer and credit risk: Evidence from ASEAN banks

Ovi, Nafisa and Bose, Sudipta and Gunasekarage, Abeyratna and Shams, Syed (2020) Do the business cycle and revenue diversification matter for banks' capital buffer and credit risk: Evidence from ASEAN banks. Journal of Contemporary Accounting and Economics, 16 (1):100186. pp. 1-19. ISSN 1815-5669


Abstract

We examine the association of the business cycle and revenue diversification with the banks’ capital buffer and credit risk for a sample of banks from the Association of Southeast Asian Nations (ASEAN) region from 1998 to 2018, using 2847 banking firm–year observations. We find that ASEAN region banks react anticyclically in adjusting their capital buffer levels and credit risk. We find revenue diversification benefits and that banks, through revenue diversification, can reduce their credit risk while achieving capital savings when confronting economic downturns. Our results offer support for the Basel III accord. However, the relations revealed are somewhat moderated by the regulatory quality, competition, and phase of the business cycle encountered by ASEAN region banks.


Statistics for USQ ePrint 38872
Statistics for this ePrint Item
Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Faculty/School / Institute/Centre: Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021)
Faculty/School / Institute/Centre: Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021)
Date Deposited: 22 Jul 2020 04:35
Last Modified: 27 Jul 2020 01:40
Uncontrolled Keywords: Basel III Accord; Business cycle; Capital buffer; Credit risk; Revenue diversification
Fields of Research (2008): 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150201 Finance
Identification Number or DOI: https://doi.org/10.1016/j.jcae.2020.100186
URI: http://eprints.usq.edu.au/id/eprint/38872

Actions (login required)

View Item Archive Repository Staff Only