Impact of Corruption on Banking Profitability in ASEAN Countries: An Empirical Analysis

Impact of corruption on banking profitability in ASEAN countries: an empirical analysis, A Mongid, IM Tahir - Banks and Bank Systems, Vol 6, Issue 1, 2011

8 Pages Posted: 28 Sep 2015

See all articles by Abdul Mongid

Abdul Mongid

STIE Perbanas Surabaya - Banking Department

Izah Mohd Tahir

Independent

Date Written: January 27, 2011

Abstract

Exploring key determinant variables that influence bank profitability is of interest to bankers and investors as well as regulators, as profitability is regarded as a necessary condition for the stability of the banking system. In this paper we conducted a study to determine the profitability of banking firms covering six countries in Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines and Vietnam. Our study found that a higher ratio of personnel expenses to total cost (PERSTC) and equity to total assets (EQTA), increase bank profitability and are negatively associated with higher regulatory capital (CAR), net loan total asset (NLTA) and cost to income ratio (CIR). Economic growth (EGRW) is positive but not significant. In terms of country effect, only Indonesia is significant. Surprisingly, the corruption index (CRPIX) is positive and its significance to profitability underlines the ability of banking firms to enjoy benefits in a bad governance environment.

Suggested Citation

Mongid, Abdul and Tahir, Izah Mohd, Impact of Corruption on Banking Profitability in ASEAN Countries: An Empirical Analysis (January 27, 2011). Impact of corruption on banking profitability in ASEAN countries: an empirical analysis, A Mongid, IM Tahir - Banks and Bank Systems, Vol 6, Issue 1, 2011, Available at SSRN: https://ssrn.com/abstract=2666115

Abdul Mongid (Contact Author)

STIE Perbanas Surabaya - Banking Department ( email )

Jl. Nginden Semolo 36
Surabaya Indonesia, East Java 60118
Indonesia
62315947151 (Phone)
62315935937 (Fax)

HOME PAGE: http://www.perbanas.ac.id

Izah Mohd Tahir

Independent ( email )

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