Template-type: ReDIF-Paper 1.0
Author-Name: Wahyu Yuwana Hidayat
Author-Name-First: Wahyu
Author-Name-Last: Hidayat
Author-Email: wyuwana@bi.go.id
Author-Workplace-Name: Bank Indonesia
Author-Workplace-Homepage: http://www.bi.go.id/
Author-Name: Makoto Kakinaka
Author-Name-First: Makoto
Author-Name-Last: Kakinaka
Author-Email: kakinaka@iuj.ac.jp
Author-Workplace-Name: International University of Japan
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Author-Name: Hiroaki Miyamoto
Author-Name-First: Hiroaki
Author-Name-Last: Miyamoto
Author-Email: hmiyamot@iuj.ac.jp
Author-Workplace-Name: International University of Japan
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Title: Bank Risk and Non-Interest Income Activities in the Indonesian Banking Industry
Abstract: The recent trend of product diversification in the Indonesian banking industry underscores the importance of non-interest income activities. This study examines the relationship between product diversification and bank risk over the period of 2002-2008. Our analysis shows clear evidence that the effect of product diversification on bank risk depends highly on the bank's asset size. Specifically, the degree of product diversification is negatively associated with bank risk for small-sized banks. Conversely, the degree of product diversification is positively related to bank risk for large-sized banks. This finding suggests that deregulation encouraging banks to become more involved in non-traditional activities may have an adverse effect on the overall banking system where large-sized banks are playing a significant role in Indonesia.
Length: 25 pages
Creation-Date: 2012-04
Number: EMS_2012_03
File-URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2012_03.pdf
File-Format: Application/pdf
File-Function: First version, 2012
File-Size: 322KB
Keywords: Bank risk, Product diversification, Non-interest income activities
Handle: RePEc:iuj:wpaper:EMS_2012_03