Towards green recovery: Can banks achieve financial sustainability through income diversification in ASEAN countries?
Özet
Establishing sustainable and balanced development for green financing is critical for
improving financial sustainability and banks’ capability. Banks struggle to achieve
economic sustainability in the current highly competitive business environment. This
research examines the impact of income diversification on financial sustainability proxy
by return on assets (ROA) by applying the quantile regression technique to the data
from banks of ASEAN countries over the period 2008–2019. In addition, liquidity risk,
bank size, interest and non-interest incomes, and market capitalization are studied as
control variables. The empirical findings indicate that income diversification positively
impacts return on assets at all countries’ lower, middle, and upper quantiles, even
though sizes can differ across countries and quantiles. Moreover, market capitalization,
non-interest income, and banks’ size favorably impact banks’ performance. In contrast,
liquidity risk and interest incomes are negatively linked to the performance of banks
for all countries at each quantile. These results have significant strategic implications
for managers, regulators, and policymakers who share a common interest in boosting
financial sustainability and performance and significantly shaping green recovery.
