Banking integration in ASEAN-6: An empirical investigation

Dao, Ha; Gillet, Philippe; Le, Phuong; Vo, Dinh-Tri

doi:10.1016/j.econmod.2019.09.017

Cited by 14 publications

(8 citation statements)

References 42 publications

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“…The heterogeneity between ASEAN countries and their banking sectors might result from their fundamental differences in economic development, institutional environment and regulatory framework (Ha et al , 2020; Wu, 2019). Although the region has been pushing to higher financial integration in recent years, our empirical results imply that, at least to the systemic risk, the banking supervisors would still need to account for idiosyncratic characteristics of their banking sector in designing relevant regulatory frameworks.…”

Section: Empirical Studymentioning

confidence: 99%

“…Consequently, the regional markets have become significantly sensitive to the movements of global markets, leading to tightening macroprudential policy, especially the bank regulations, to ensure the soundness of their banking sector (Huyghebaert and Wang, 2010; Burdekin and Siklos, 2012; Nguyen, 2018). Moreover, the financial systems of the ASEAN-6 are bank-based with the banks holding the predominant source of financing (Ha et al , 2020). This structure is associated with higher systemic risk, compared to that of a market-based economy, due to the risky nature of banks with high leverage, large asset-liability mismatches and a high level of interconnectedness (Bats and Houben, 2020).…”

Section: Introductionmentioning

confidence: 99%

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Systemic risk in ASEAN-6: a new empirical investigation

2021

IJOEM

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PurposeThe authors provide a comprehensive study on systemic risk of the banking sectors in the ASEAN-6 countries. In particular, they investigate the systemic risk dynamics and determinants of 49 listed banks in the region over the 2000–2018 period.Design/methodology/approachThe authors employ the market-based SRISK measure of Brownlees and Engle (2017) to investigate the systemic risk of the ASEAN-6's banking sectors.FindingsThe authors find that the regional systemic risk fluctuates significantly and currently at par or higher level than that of the recent global financial crisis. Systemic risk is generally associated with banks that have bigger size, more traditional business models, lower quality in their loan portfolios, less profitable and with lower market-to-book values. However, these relationships vary significantly between ASEAN countries.Research limitations/implicationsThe research focuses on the systemic risk of ASEAN-6 countries. Therefore, the research results may lack generalizability to other countries.Practical implicationsThe authors’ empirical evidence advocates the use of capital surcharges on the systemically important financial institutions. Although the region has been pushing to higher financial integration in recent years, the authors encourage the regional regulators to account for the idiosyncratic characteristics of their banking sectors in designing effective macroprudential policy to contain systemic risk.Originality/valueThis paper provides the first study on the systemic risk of the ASEAN-6 region. The empirical evidence on the drivers of systemic risk would be of interest to the regional regulators.

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Section: Empirical Studymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Systemic risk in ASEAN-6: a new empirical investigation

2021

IJOEM

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“…As a result of the banking sector's reform and deregulation initiatives, Figure 1 illustrates the gradual increase in bank credit to the private sector (as a proportion of GDP) from 2006 to 2019. This dynamic region has also been working towards establishing a free trade zone through the ASEAN Free Trade Agreement (AFTA) in 1992 as well as an ASEAN Economic Community (AEC) by the year 2025 (Ha et al, 2019). This framework was adopted in 2014 as part of AEC to liberalise the banking market for regional banks, stabilise credit and economic growth and promote financial inclusion and transparency (Johnen & Mußhoff, 2023;Noman et al, 2020;Sakyi-Nyarko et al, 2022).…”

Section: Introductionmentioning

confidence: 99%

Does credit growth mitigate emission intensity in ASEAN countries?

Masud,

Noman,

Akhtar

et al. 2023

J of Intl Development

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In empirical studies, the disparity between financial development and environmental quality has prompted us to examine the impact of credit growth on environmental quality in ASEAN countries. These countries have experienced phenomenal credit growth over the past three decades due to their adoption of financial liberalisation, integration and innovation. In this study, we investigated the role of credit growth on environmental quality while controlling for several macroeconomic variables, including regulatory quality, natural resources, foreign direct investment, globalisation and per capita gross domestic product growth. Using static models (ordinary least square [OLS], random effect model, Panel Corrected Standard Error and partial spatial cross correlation) and dynamic models (dynamic OLS, dynamic random effect and two‐step system generalised methods of moments (GMM) on data spanning from 1984 to 2019, we observed a nonlinear association between credit growth and environmental quality. The findings suggest that credit growth may simultaneously have favourable and detrimental effects on environmental quality. High credit growth can lead to increased emissions and environmental degradation through the promotion of fossil fuel‐driven energy consumption, production and distribution of economic resources. However, if the government promotes regulatory quality and encourages lenders to invest more in green technologies and renewable and sustainable energy sources, credit growth may contribute to improved environmental quality. These results carry important policy implications.

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“…The main objective of ABIF is to prepare market access and freedom of banking operations in ASEAN member countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam), in the context of creating Qualified ASEAN Banks (QAB) [1]. However, banking integration in the ASEAN region brings new challenges and risks related to money market uncertainties and capital flow volatility [2,3]. Increasing global financial liberalization is adding to the severity of systemic banking risks among ASEAN countries [4,5].…”

Section: Introductionmentioning

confidence: 99%

Banking Industry Sustainable Growth Rate under Risk: Empirical Study of the Banking Industry in ASEAN Countries

et al. 2022

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This research examines how the banking industry maintains its sustainable growth rate. The sample consists of 328 commercial banks in the ASEAN area. A fixed effect model is employed to analyze the data. The study reveals several findings: (1) The countries with the most risk in the banking industry are Indonesia, Thailand, Philippines, Malaysia, and Singapore. (2) Operational risk has a negative effect on sustainable growth and a positive effect on actual growth. Asset utilization positively affects sustainable growth and positively affects actual growth. (3) Business risk has a positive effect on sustainable growth but a negative on actual growth. (4) Liquidity risk positively affects both sustainable growth and actual growth. (5) Financial risk has a negative effect on sustainable growth but not on actual growth. These findings contribute to the body of knowledge of financial management specifically in terms of determining dividend and financing policy, operational activities and bridging conflicting objectives of managers and shareholders. Furthermore, these findings have implications for the practice, especially for shareholders, in how to maintain and set sustainable growth targets in conditions of various risks in banking. For banks within the framework of ASEAN integration, it is important to place SGR as a measure of sustainable finance.

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Banking integration in ASEAN-6: An empirical investigation

Cited by 14 publications

References 42 publications

Systemic risk in ASEAN-6: a new empirical investigation

Systemic risk in ASEAN-6: a new empirical investigation

Does credit growth mitigate emission intensity in ASEAN countries?

Banking Industry Sustainable Growth Rate under Risk: Empirical Study of the Banking Industry in ASEAN Countries

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