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The Impact of Non-Interest Income on the Performance of Commercial Banks in the ASEAN Region

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Listed:
  • Thi Thu Hang Phan

    (Faculty of Finance and Accountancy, Ho Chi Minh University of Food Industry, No. 140 Le Trong Tan Street, Tay Thanh Ward, Tan Binh District, Ho Chi Minh City 700000, Vietnam)

  • An Ha Thi Pham

    (Faculty of Finance and Banking, Van Lang University, 69/68 Dang Thuy Tram Street, Ward 13, Binh Thanh District, Ho Chi Minh City 700000, Vietnam)

  • Hoang Anh Le

    (Institute for Research Science and Banking Technology, Ho Chi Minh University of Banking, No. 36 Ton That Dam Street, Nguyen Thai Binh Ward, District 1, Ho Chi Minh City 700000, Vietnam)

  • Thai Bao Ngoc Lam

    (Faculty of Economy and Law, Tien Giang University, No. 119 Ap Bac Street, Ward 5, My Tho City 860000, Vietnam)

Abstract

This study investigates how non-interest income affects the performance of commercial banks in the ASEAN region. Using data from 36 commercial banks in ASEAN countries from 2008 to 2020 and Bayesian analysis techniques, the results of this study indicate that non-interest income negatively affects commercial banks’ performance in the ASEAN region. In addition, the quantile regression results demonstrated that non-interest income negatively affects commercial banks’ performance in the ASEAN region at all three percentiles (25th, 50th, and 75th). Additionally, we identified a non-interest income threshold of 59.3 percent of total income for commercial banks in the ASEAN region. In light of banking competition and the necessity for commercial banks to diversify their income streams, we offer a variety of policy implications to increase the performance of commercial banks.

Suggested Citation

  • Thi Thu Hang Phan & An Ha Thi Pham & Hoang Anh Le & Thai Bao Ngoc Lam, 2022. "The Impact of Non-Interest Income on the Performance of Commercial Banks in the ASEAN Region," JRFM, MDPI, vol. 16(1), pages 1-16, December.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2022:i:1:p:18-:d:1017486
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    References listed on IDEAS

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    3. Lee, Chien-Chiang & Yang, Shih-Jui & Chang, Chi-Hung, 2014. "Non-interest income, profitability, and risk in banking industry: A cross-country analysis," The North American Journal of Economics and Finance, Elsevier, vol. 27(C), pages 48-67.
    4. Pennathur, Anita K. & Subrahmanyam, Vijaya & Vishwasrao, Sharmila, 2012. "Income diversification and risk: Does ownership matter? An empirical examination of Indian banks," Journal of Banking & Finance, Elsevier, vol. 36(8), pages 2203-2215.
    5. Rosie Smith & Christos Staikouras & Geoffrey Wood, 2003. "Non-interest income and total income stability," Bank of England working papers 198, Bank of England.
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