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- Title
MONETARY POLICY AND THE DIVERSIFICATION-PROFITABILITY LINKAGE IN BANKING: EVIDENCES FROM EMERGING MARKET ECONOMIES.
- Authors
PEI-FEN CHEN; JHIH-HONG ZENG; CHIEN-CHIANG LEE
- Abstract
In previous studies, the stance of monetary policy is proven to associate with banking profitability or activities. This paper provides empirical evidence aiming at the influence of monetary policy, including stances of expansionary and contractionary monetary policies, on the relationship between banks' income diversification and their profitabilities in emerging market economies. We find the significant evidence that expansionary monetary policies can raise banks' diversification efforts, whereas contractionary monetary policies weaken the efforts of banking diversification, for which our most robustness tests support these findings. There are some relevant implications and suggestions for bank managers and policymakers.
- Subjects
MONETARY policy; PORTFOLIO diversification; PROFITABILITY; EMERGING markets; BANKING industry
- Publication
South African Journal of Economics, 2015, Vol 83, Issue 4, p576
- ISSN
0038-2280
- Publication type
Article
- DOI
10.1111/saje.12070