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The Role of Corruption, Transparency, and Regulations on Asian Banks’ Performance: An Empirical Analysis

Author

Listed:
  • Samia Nasreen

    (Lahore College for Women University)

  • Mehwish Gulzar

    (Lahore College for Women University)

  • Muhammad Afzal

    (Lahore College for Women University)

  • Muhammad Umar Farooq

    (Lahore College for Women University
    Deloitte Financial Risk Advisory)

Abstract

This study examines the effect of corruption, regulations, and transparency on banking sector performance using a sample of 309 banks from 15 Asian countries over the period 2010 to 2020. Banking sector performance is measured in terms of both bank profitability and bank stability in the present study. Generalized method of moments (GMM) dynamic panel estimation procedure is applied for empirical analysis . The findings of the study suggest that transparency has positive effect on both bank profitability and bank stability, while regulation has positive effect only on banks stability. In contrast, corruption is negatively related to both bank profitability and bank stability. Furthermore, the findings reveal that corruption indirectly increases bank crisis by decreasing bank’s lending through excessive risk. In addition, the significant role of macroeconomic shocks in determining banking sector performance is observed in Asian countries. The study is in favor of effective regulatory system to control the adverse effect of corruption on banking sector performance.

Suggested Citation

  • Samia Nasreen & Mehwish Gulzar & Muhammad Afzal & Muhammad Umar Farooq, 2024. "The Role of Corruption, Transparency, and Regulations on Asian Banks’ Performance: An Empirical Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 6475-6506, June.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:2:d:10.1007_s13132-023-01153-8
    DOI: 10.1007/s13132-023-01153-8
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