| dc.description.abstract | This study aims to examine the effect of loan portfolio concentration on bank
stability by considering variations in market competition levels within the ASEAN
banking sector. The analysis covers 32 commercial banks across four ASEAN
countries over the period 2014–2023, using a dynamic panel data approach. Bank
stability is proxied by the Z-Score, while loan concentration is measured using the
Herfindahl-Hirschman Index (HHI). Control variables include Return on Assets
(ROA), bank size, leverage, and regulatory capital implementation under Basel III
(CET1).
The study employs the System Generalized Method of Moments (System
GMM) estimation technique to address potential endogeneity and dynamic panel
effects. The results show that in the group of banks operating under high
competition, HHI has a positive and significant impact on the Z-Score, indicating
that greater portfolio concentration improves financial stability. In contrast, for
banks in less competitive markets, the effect is weaker and statistically insignificant.
Meanwhile, ROA demonstrates a consistently positive and significant relationship
with stability across both groups, whereas size, leverage, and CET1 do not exhibit
a statistically significant effect.
The novelty of this research lies in its segmentation of banking market
structures based on competition intensity, along with the inclusion of CET1 as a
proxy for macroprudential regulatory effectiveness within the ASEAN context. The
findings suggest that credit allocation strategies and capital requirements should
be tailored to market characteristics in order to strengthen the resilience of the
banking system. | en_US |
