Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants
The paper analyzes the profitability of banks in Korea, while controlling for a wide array of bank specific and macroeconomic determinants. We find that Korean banks with lower liquidity levels tend to exhibit higher profitability. Furthermore, higher diversification regarding banks’ income sources...
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| Format: | Article |
| Language: | English |
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Feng Chia University
2011
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| Online Access: | http://irep.iium.edu.my/5157/1/%283%29MS4617_Annotated.pdf |
| _version_ | 1825644632129667072 |
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| author | Sufian, Fadzlan |
| author_facet | Sufian, Fadzlan |
| author_sort | Sufian, Fadzlan |
| collection | IIUM |
| description | The paper analyzes the profitability of banks in Korea, while controlling for a wide array of bank specific and macroeconomic determinants. We find that Korean banks with lower liquidity levels tend to exhibit higher profitability. Furthermore, higher diversification regarding banks’ income sources towards derivative instruments and other fee-based activities shows a positive effect. The impacts of credit risk and overhead costs are always negative whether we control for the macroeconomic and financial conditions or not. Business cycle effects, particularly inflation, display a substantial pro-cyclical impact on bank profitability. The industry concentration of the national banking system positively and significantly affects bank performance. The impact of the Asian financial crisis is negative, while Korean banks have been relatively more profitable during the pre-crisis compared to the post-crisis period. |
| first_indexed | 2024-03-05T22:35:39Z |
| format | Article |
| id | oai:generic.eprints.org:5157 |
| institution | International Islamic University Malaysia |
| language | English |
| last_indexed | 2024-03-05T22:35:39Z |
| publishDate | 2011 |
| publisher | Feng Chia University |
| record_format | dspace |
| spelling | oai:generic.eprints.org:51572011-12-20T08:05:08Z http://irep.iium.edu.my/5157/ Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants Sufian, Fadzlan HG1501 Banking The paper analyzes the profitability of banks in Korea, while controlling for a wide array of bank specific and macroeconomic determinants. We find that Korean banks with lower liquidity levels tend to exhibit higher profitability. Furthermore, higher diversification regarding banks’ income sources towards derivative instruments and other fee-based activities shows a positive effect. The impacts of credit risk and overhead costs are always negative whether we control for the macroeconomic and financial conditions or not. Business cycle effects, particularly inflation, display a substantial pro-cyclical impact on bank profitability. The industry concentration of the national banking system positively and significantly affects bank performance. The impact of the Asian financial crisis is negative, while Korean banks have been relatively more profitable during the pre-crisis compared to the post-crisis period. Feng Chia University 2011 Article PeerReviewed application/pdf en http://irep.iium.edu.my/5157/1/%283%29MS4617_Annotated.pdf Sufian, Fadzlan (2011) Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants. Journal of Economics and Management, 7 (1). pp. 43-72. ISSN 1819-0917 http://www.jem.org.tw/ |
| spellingShingle | HG1501 Banking Sufian, Fadzlan Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants |
| title | Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants |
| title_full | Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants |
| title_fullStr | Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants |
| title_full_unstemmed | Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants |
| title_short | Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants |
| title_sort | profitability of the korean banking sector panel evidence on bank specific and macroeconomic determinants |
| topic | HG1501 Banking |
| url | http://irep.iium.edu.my/5157/1/%283%29MS4617_Annotated.pdf |
| work_keys_str_mv | AT sufianfadzlan profitabilityofthekoreanbankingsectorpanelevidenceonbankspecificandmacroeconomicdeterminants |