Multimarket Contact, Income Diversification and Bank Performance

IF 1.9 Q3 BUSINESS

International Journal of the Economics of Business Pub Date : 2021-08-25 DOI:10.1080/13571516.2021.1967084

Khanh Hoang, Liem Nguyen, Son Tran

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引用次数: 3

Abstract

Abstract Faced with intense competition, banks may find geographic and income diversification strategies indispensable to remain competitive. Surprisingly, the literature has only discussed the two strategies separately, and there appears little effort in considering both strategies simultaneously, at least in the investigation of their intertwined impact on bank performance. We adopt System Generalized Method of Moments for a panel dataset covering commercial banks in Vietnam to investigate the impact of these diversification strategies on bank performance. The research findings suggest that multimarket contact has a positive impact on performance, supporting the mutual forbearance hypothesis. Income diversification is also positively related to bank profitability. Importantly, our results show that the interaction between multimarket contact and income diversification has a negative effect on bank profitability. This evidence implies that facing with multimarket contacts, a bank with diversified businesses is more likely to choose to compete, thus raising the competition and lowering its profitability.

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多市场接触、收入多元化与银行绩效

面对激烈的竞争，银行必须采取地域多元化和收入多元化战略来保持竞争力。令人惊讶的是，文献只分别讨论了这两种策略，并且似乎很少努力同时考虑这两种策略，至少在调查它们对银行绩效的相互交织的影响时。我们对覆盖越南商业银行的面板数据集采用系统广义矩量方法来研究这些多元化策略对银行绩效的影响。研究结果表明，多市场接触对绩效有正向影响，支持相互容忍假说。收入多元化也与银行盈利能力呈正相关。重要的是，我们的研究结果表明，多市场联系和收入多样化之间的相互作用对银行盈利能力有负面影响。这一证据表明，面对多市场接触，业务多元化的银行更有可能选择竞争，从而提高了竞争，降低了盈利能力。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Journal of the Economics of Business BUSINESS-

CiteScore

2.60

自引率

8.30%

发文量

期刊介绍： International Journal of the Economics of Business presents original, peer reviewed research in economics that is clearly applicable to business or related public policy problems or issues. The term "business" is used in its widest sense to encompass both public and private sector—governmental, private non-profit and cooperative organizations, as well as profit-seeking enterprises. International Journal of the Economics of Business carries papers relating to three main spheres: The organization—to analyse and aid decision making and the internal organization of the business; The industry—to analyse how businesses interact and evolve within and across industries.