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Please use this identifier to cite or link to this item: http://hdl.handle.net/1812/749

Title: How does competition impact bank risk - taking? Malaysian perspective
Authors: Damian Oh Kok Huat
Keywords: Bank risk-taking
Banking systems
Loan market
Bank stability
Asian financial crisis
Malaysia
Issue Date: Nov-2008
Publisher: University of Malaya
Abstract: A common assumption in the academic literature and in the actual supervision of banking systems worldwide is that franchise value plays a key role in limiting bank risk-taking. As the underlying source of franchise value is assumed to be market power, reduced competition has been considered to promote banking stability. In contrast, there is an alternative view that concentration in the loan market could lead to increase in borrower debt loads and a corresponding increase in loan defaults that would undermined bank stability. There is also a third assumption that encompasses both the above approaches that a nonlinear relationship exists between competition and bank risk-taking. Using the datasets extracted from the Malaysian banks including foreign owned banks, incorporated in Malaysia, we examine the empirical nature of the relationship between competition and bank risk-taking. From the study, using Lerner indexes based on bank specific loan and deposit interest rates to measure market power, we find negative relationships between both the loan and deposit market power and bank risk, measured by the ratio of non-performing (NPL). This result provides evidence in favor of the franchise value paradigm.
Description: Dissertation (M.B.A.) -- Faculty of Business and Accountancy, University of Malaya, 2008.
URI: http://dspace.fsktm.um.edu.my/handle/1812/749
Appears in Collections:Masters Dissertations : MBA

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How Does Competition Impact Bank Risk-Taking - Malaysian Perspective (Table Content).pdfAbstract and Table of Content73.68 kBAdobe PDFView/Open
How Does Competition Impact Bank Risk Taking - Malaysian Perspective (Main).pdfThesis Text386.07 kBAdobe PDFView/Open


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