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The Cambodian banking sector has rapidly expanded in recent decades, although there are concerns about the performance of Cambodian banks and the country’s banking sector. A paucity of empirical evidence to clarify the real issues in the banking sector also makes it difficult to formulate effective policy measures to address any potential problems. This study provides empirical evidence by estimating the cost function and efficiencies of 34 commercial banks over the period from 2012 to 2015. We find that the average cost efficiency scores range from 0.60 when measuring bank outputs as loan and deposit amounts, and 0.77 when measuring bank outputs as interest and non-interest income, suggesting that if they are operated more efficiently, they could cut costs by 40% in fund mobilization and 23% in profit making while keeping the same output level. We also find that the Cambodian banks have experienced an improvement in efficiency scores over the period for both aspects of banking activities. Furthermore, we find that expanding a branch network into rural areas is inefficient for bank management, and holding excessive liquidity is associated with higher efficiency, but diversification in bank business operations is negatively associated with cost efficiency of Cambodian commercial banks.

The role of macroprudential policies (MPPs) in influencing bank behavior has expanded significantly in recent years. However, the evidence regarding the impact of MPPs in influencing bank behavior across countries with different Future time reference (FTR) of languages has not been adequately examined. To inform this debate, utilizing bank-level data during 2010–2019, we examine how MPPs affect bank return and risk across countries with varying FTR of languages. The findings show that using MPPs lowers risk in countries with strong FTR. This is manifest in baseline regressions as well as in robustness tests that incorporate additional dimensions of a country’s economic and institutional environment. Over and above, the results show that although borrower- and lender-focused macroprudential measures are equally effective, their efficacy differs, with the former set of instruments being more useful in Emerging Market and Developing Economies (EMDEs). In contrast, the latter holds greater traction in advanced economies.

By the end of the 1990s, the Singaporean government had recognised the need to open up its banking sector so as to remain competitive in the global economy. The Monetary Authority of Singapore (MAS) thus began deregulation of the banking sector in 1999 to strengthen the competitiveness of local banks relative to their foreign competitors through mergers. This paper employs a nonparametric Malmquist productivity index to provide measure of productivity, technological change and efficiency gains over the period 1995–2005. The findings reveal some total factor productivity growth associated with deregulation and scale efficiency improvement largely from mergers amongst the local banks.

Policy discussions are dominated by the view that governmental safety nets offered to banks cause moral hazard and encourage risk-taking. However, [Cordella, T and E Levy Yeyati (2003). Bank bailouts: moral hazard vs. value effect. Journal of Financial Intermediation, 12, 300–330.] proposed that government support offered during crises may increase bank franchise value, resulting in less risk-taking. This paper presents additional theoretical results on the franchise value effect. The franchise value effect can dominate over the moral hazard effect even when there are no specific crisis periods. The franchise value effect dominates if bank shareholders have a weak time preference and if the decision on the intensity of risk monitoring is a long-term choice.

This study examines the relationship between bank-specific variables, macroeconomic variables and non-performing loans (NPLs) in the seven countries of Southeast Asia (Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) during the pre-COVID-19and COVID-19 pandemic. This study adopts panel data regression and distributed lagged regression to examine the impact of bank-specific variables and macroeconomic variables as NPL determinants. The results show that bank-specific variables significantly correlate to NPL, but limited evidence indicates the influence of macroeconomic variables during pre-COVID. Nonetheless, macroeconomic variables are significant to NPL with the emergence of the pandemic, while the bank-specific variables are found to be insignificant. It shows that macroeconomic variables have a greater impact during the turbulent period as they affect most businesses, especially during the pandemic. Furthermore, macroeconomic variables are observed to have a stronger influence on developed countries, but the impact of bank-specific variables is stronger in emerging countries. The results of this study assist policymakers, regulators, banks and governments in identifying the determinants of high NPL as the indicator of a financial crisis. Greater emphasis shall be given to the changes in macroeconomic variables.