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Analysis of diversification on bank risk : evidence from Indonesian commercial banks 2010-2018

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The purposes of this study are to investigate the relationship of each component diversification; revenue, asset, liability, and geographic diversification toward bank risk in Indonesia commercial banks. The relationship between diversification components and bank risk are analyzed individually using panel data. Observation of 50 Indonesian commercial banks are included for the period of 2010-2018. The Herfindahl-Hirschman index (HHI) and natural logarithm (Ln.) are used as the diversification determinants while bank risk is proxied by Z score. In the analysis control variables also considered using macroeconomic factors and banks specific factors. GDP and inflation used as proxies for macroeconomic factors while bank size, capital adequacy, and liquidity are the proxies for banks specific factors. Thisrnstudy provides several findings for bank diversification. Revenue diversification found to be an opportunity for commercial banks to increase stability and avoid insolvency risk as current commercial banks still focus on traditional activities. The same result found in asset diversification. On the contrary, diversification within non-interest income, liability and geographic diversification found to increase bank risk.

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Availability

B03071

(Rack Thesis)

Available

Detail Information

Series Title

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Call Number

3071

Publisher

: Swiss German University., 2019

Collation

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Language

English

ISBN/ISSN

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Classification

NONE

Content Type

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Media Type

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Carrier Type

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Edition

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Subject(s)

acc
Non-interest income
Revenue Diversification
Assets Diversification
Liability Diversification
Geographic Diversification

Specific Detail Info

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Statement of Responsibility

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