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Sectoral Loan Portfolio Concentration and Bank Stability: Evidence from an Emerging Economy
Journal of Emerging Market Finance ( IF 1.2 ) Pub Date : 2019-12-09 , DOI: 10.1177/0972652719878597
Baah Aye Kusi 1 , Lydia Adzobu 1 , Alex Kwame Abasi 2 , Kwadjo Ansah-Adu 3
Affiliation  

In this study, the effect of sectoral loan portfolio concentration on bank stability is investigated in the Ghanaian banking sector between 2007 and 2014. Specifically, we investigate the linearity and non-linearity effects of sectoral loan concentration on bank stability given the limited exploration of this nexus. Employing a two-step generalized method of moments (GMM) robust random and fixed effects panel models of 30 banks, the study provides evidence showing that sectoral loan concentration weakens the stability of banks. This confirms the concentration-fragility hypothesis and the diversification theory of traditional banking but may promote bank stability beyond a certain threshold point. This implies that bank sectoral loan concentrate has a direct non-linear U-shape effect on bank stability in Ghana. We argue that although sectoral loan concentration may weaken stability of banks in the short run, it may however enhance the stability of banks in the long run through prolonged expert knowledge, experience and understanding of sectors. From these findings, policymakers, regulators and bank managers must not only develop and design policies and regulations that prohibit sectoral loan concentration but should also incorporate plans and policies that encourage banks to develop core competence and competitive advantage to take advantage of advancing bank stability through sectoral loan concentration.

JEL Codes: G10; G18; G41



中文翻译:

部门贷款组合的集中度和银行稳定性:来自新兴经济的证据

在这项研究中,调查了2007年至2014年间加纳银行业部门贷款组合的集中度对银行稳定性的影响。特别是,在有限的探索下,我们研究了部门贷款集中度对银行稳定性的线性和非线性影响。关系。该研究采用两步广义矩量法(GMM)的30家银行稳健随机和固定效应面板模型,该研究提供了证据,表明部门贷款集中度削弱了银行的稳定性。这证实了传统银行业的集中度-脆弱性假说和多元化理论,但可能会促进银行稳定性超过某个阈值点。这意味着银行部门的贷款集中度对加纳的银行稳定性具有直接的非线性U形影响。我们认为,尽管部门贷款集中可能会在短期内削弱银行的稳定性,但是通过长期的专家知识,经验和对行业的了解,它可能会提高银行的长期稳定性。从这些发现中,政策制定者,监管者和银行经理不仅必须制定和设计禁止部门贷款集中的政策和法规,而且还应纳入鼓励银行发展核心竞争力和竞争优势的计划和政策,以利用通过部门部门提高银行稳定性的优势。贷款集中度。

JEL代码: G10;G18; G41

更新日期:2019-12-09
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