UM E-Theses Collection (澳門大學電子學位論文庫)

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Bank competition, efficiency, and liquidity creation in Asia Pacific

English Abstract

This thesis consists of three empirical essays about bank competition, efficiency, and liquidity creation in the Asia Pacific region. Specifically, this thesis investigates the relationship between competition and financial stability, the relationship between efficiency and bank shareholder value, and the relationship between regulatory capital and liquidity creation. The first essay examines the influence of bank competition, concentration, regulation and national institutions on individual bank fragility utilizing a large sample of commercial banks in 14 Asia Pacific economies between 2003 and 2010. The results suggest that greater concentration fosters financial fragility and lower pricing power induces bank risk exposure after controlling for macroeconomic, bank-specific, regulatory and institutional factors. In terms of regulations and institutions, tougher entry restrictions improve bank stability, whereas stronger deposit insurance schemes are associated with greater bank fragility. Finally, the results indicate that banks were more fragile during the recent financial turmoil. The second essay investigates the relationship between shareholder value and efficiency utilizing cross-country data from 14 Asia Pacific economies from 2003 to 2010. In general, the results indicate that shareholder value is positively linked to improvements in both cost and profit efficiency, and this influence varies over time, which suggests that banks must place greater emphasis on both cost and profit efficiency to improve future performance and benefit their owners. The findings also suggest that bank size, credit losses, and market risk significantly influence bank performance. These results are robust to various model specifications. III Employing a simultaneous equations framework, the third essay investigates the relationship between liquidity creation and regulatory capital for banks in 14 Asia Pacific economies from 2005 to 2010. We find that the trade-off between the benefits of financial stability induced by enhanced capital requirements and those of higher liquidity creation is only applicable to small banks and banks located in Developing Asia. In addition, large banks and those from Industrialized Asia and the Newly Industrialized Economies decrease their regulatory capital when they create more liquidity.

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Lin, Yong Jia


Faculty of Business Administration




Banks and banking -- Asia

Banks and banking -- Pacific Area

Bank failures -- Asia

Bank failures -- Pacific Area

Asia -- Economic conditions

Pacific Area -- Economic conditions


Fu, Xiao Qing

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