Stock Market's Assessment of Bank Diversification: Evidence from Listed Public Banks in South Asian Countries

48 Pages Posted: 10 Apr 2013

See all articles by Michael J. Dempsey

Michael J. Dempsey

Ton Duc Thang University (TDTU)

Piyadasa Edirisuriya

Monash University; Financial Research Network (FIRN)

Abey Gunasekarage

Monash University; Monash University

Date Written: February 9, 2013

Abstract

Using data for four South Asian countries over a twelve-year period, we examine how the stock markets in these recently liberalised economies assess diversification attempts of listed public banks. We find that the income diversification has a significant positive association with market to book value and a significant negative association with return volatility. However, the relationship observed between diversification and markets’ assessment of value and risk is non-linear. Relative to listed banks operating in India, the relationship observed remains less pronounced for the banks operating in Bangladesh, Pakistan and Sri Lanka.

Keywords: South Asian Countries, Financial Deregulation, Stock Markets, Listed Public Banks, Bank Diversification

JEL Classification: G21, G15

Suggested Citation

Dempsey, Michael J. and Edirisuriya, Piyadasa and Gunasekarage, Abeyratna, Stock Market's Assessment of Bank Diversification: Evidence from Listed Public Banks in South Asian Countries (February 9, 2013). Available at SSRN: https://ssrn.com/abstract=2247775 or http://dx.doi.org/10.2139/ssrn.2247775

Michael J. Dempsey

Ton Duc Thang University (TDTU) ( email )

District 7
Ho Chi Minh City, 3001
Vietnam

Piyadasa Edirisuriya (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Abeyratna Gunasekarage

Monash University ( email )

Building 11E
Clayton, Victoria 3800
Australia

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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