Asean Banking Efficiency And Its Convergence Club

Nur Afifah, Roslan (2017) Asean Banking Efficiency And Its Convergence Club. [Final Year Project Report] (Unpublished)

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Abstract

This study analyse commercial banks efficiency in ASEAN countries and its convergence club. The study used time series data collected from period 2005 to 2010. The variables in the study is output (value added). Phillips and Sui (2007) panel methodology were applied in thus study to investigate the possibility of convergence or divergence within commercial banks in ASEAN countries. The main finding shows that RHB bank from Malaysia and Bank of Singapore from Indonesia are diverging and the rest of commercial banks adopted in this study are converging. All commercial banks around ASEAN that converge together are either a neighbouring countries that help each other in economy or have the same conflict within the country itself that affect banking efficiency in their countries. Interestingly, commercial banks from Indonesia are only converging with each other. From the empirical results, this study suggests that each of ASEAN countries should cooperate so that all banks in the region will converge towards the same efficiency path in the future. This is crucial in order to promote both banking integration as highly integrated banking sector can strengthen and improve resiliency of financial sector specifically banking industry from microeconomic and macroeconomic shocks.

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