Bank performance during the COVID-19 pandemic: does income diversification help?
ABSTRACTThe Covid-19 pandemic’s economic effect led to tighter credit standards and a decline in the market for many types of loans. With a rich database of 1,231 banks in 90 countries from 2018Q1 to 2021Q4, we conducted a timely, broad-based international study to investigate whether non-interest a...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Taylor & Francis Group
2023-12-01
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| Series: | Journal of Applied Economics |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/15140326.2023.2222964 |
| _version_ | 1797404436782383104 |
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| author | Tin H. Ho Dat T. Nguyen Thu B. Luu Tu D.Q. Le Thanh D. Ngo |
| author_facet | Tin H. Ho Dat T. Nguyen Thu B. Luu Tu D.Q. Le Thanh D. Ngo |
| author_sort | Tin H. Ho |
| collection | DOAJ |
| description | ABSTRACTThe Covid-19 pandemic’s economic effect led to tighter credit standards and a decline in the market for many types of loans. With a rich database of 1,231 banks in 90 countries from 2018Q1 to 2021Q4, we conducted a timely, broad-based international study to investigate whether non-interest activities, serving as a shock absorber, can promote bank performance before and during the Covid−19 pandemic. When using a dynamic panel data model with a system GMM estimator, our findings indicate that banks should be encouraged to diversify their income sources to reduce the adverse effects of the shock. With comparative analysis, we also found heterogeneous effects of income diversification on bank performance by its components, in pre-Covid−19 and during-Covid−19 periods, in both developed and developing countries. This study implies that bank managers should diversify income sources, especially fee-based services, trading activities, and foreign currency, to foster financial performance and stability during exogenous shocks. |
| first_indexed | 2024-03-09T02:54:56Z |
| format | Article |
| id | doaj.art-4ca9d2b55d994d588e6a8207283e0560 |
| institution | Directory Open Access Journal |
| issn | 1514-0326 1667-6726 |
| language | English |
| last_indexed | 2024-03-09T02:54:56Z |
| publishDate | 2023-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Journal of Applied Economics |
| spelling | doaj.art-4ca9d2b55d994d588e6a8207283e05602023-12-05T07:07:33ZengTaylor & Francis GroupJournal of Applied Economics1514-03261667-67262023-12-0126110.1080/15140326.2023.2222964Bank performance during the COVID-19 pandemic: does income diversification help?Tin H. Ho0Dat T. Nguyen1Thu B. Luu2Tu D.Q. Le3Thanh D. Ngo4Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh, VietnamInstitute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh, VietnamInstitute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh, VietnamInstitute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh, VietnamSchool of Aviation, Massey University, Palmerston North, New ZealandABSTRACTThe Covid-19 pandemic’s economic effect led to tighter credit standards and a decline in the market for many types of loans. With a rich database of 1,231 banks in 90 countries from 2018Q1 to 2021Q4, we conducted a timely, broad-based international study to investigate whether non-interest activities, serving as a shock absorber, can promote bank performance before and during the Covid−19 pandemic. When using a dynamic panel data model with a system GMM estimator, our findings indicate that banks should be encouraged to diversify their income sources to reduce the adverse effects of the shock. With comparative analysis, we also found heterogeneous effects of income diversification on bank performance by its components, in pre-Covid−19 and during-Covid−19 periods, in both developed and developing countries. This study implies that bank managers should diversify income sources, especially fee-based services, trading activities, and foreign currency, to foster financial performance and stability during exogenous shocks.https://www.tandfonline.com/doi/10.1080/15140326.2023.2222964DiversificationProfitabilityRisk-takingCovid-19 |
| spellingShingle | Tin H. Ho Dat T. Nguyen Thu B. Luu Tu D.Q. Le Thanh D. Ngo Bank performance during the COVID-19 pandemic: does income diversification help? Journal of Applied Economics Diversification Profitability Risk-taking Covid-19 |
| title | Bank performance during the COVID-19 pandemic: does income diversification help? |
| title_full | Bank performance during the COVID-19 pandemic: does income diversification help? |
| title_fullStr | Bank performance during the COVID-19 pandemic: does income diversification help? |
| title_full_unstemmed | Bank performance during the COVID-19 pandemic: does income diversification help? |
| title_short | Bank performance during the COVID-19 pandemic: does income diversification help? |
| title_sort | bank performance during the covid 19 pandemic does income diversification help |
| topic | Diversification Profitability Risk-taking Covid-19 |
| url | https://www.tandfonline.com/doi/10.1080/15140326.2023.2222964 |
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