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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Main Author:	Sufian, Fadzlan
Format:	Article
Language:	English
Published:	Feng Chia University 2011
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/5157/ http://irep.iium.edu.my/5157/ http://irep.iium.edu.my/5157/1/%283%29MS4617_Annotated.pdf

id	iium-5157
recordtype	eprints
spelling	iium-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/
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Sufian, Fadzlan Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants
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.
format	Article
author	Sufian, Fadzlan
author_facet	Sufian, Fadzlan
author_sort	Sufian, Fadzlan
title	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_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_sort	profitability of the korean banking sector: panel evidence on bank-specific and macroeconomic determinants
publisher	Feng Chia University
publishDate	2011
url	http://irep.iium.edu.my/5157/ http://irep.iium.edu.my/5157/ http://irep.iium.edu.my/5157/1/%283%29MS4617_Annotated.pdf
first_indexed	2023-09-18T20:13:37Z
last_indexed	2023-09-18T20:13:37Z
_version_	1777407642029785088

Profitability of the Korean banking sector: panel evidence on bank-specific and macroeconomic determinants

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