Bank Risk Exposures in the East Asian Region
Pendedahan Risiko Bank di Wilayah Asia Timur

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.

eco14477@gmail.com

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.

eychah@ukm.edu.my

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.

mariani@ukm.edu.my

Faculty of Economics and Management
Universiti Kebangsaan Malaysia
43600 UKM Bangi, Selangor, MALAYSIA.

mansorj@ukm.edu.my

Abstract

Risk management is a pivotal factor for managing financial institutions. Efficient and sustainable banking activity requires managers to take all sources of instability into account and to adopt strategies against risks. The objective of the present paper is to investigate the sources of bank risks with a straightforward and comprehensive risk measurement for the East Asian region. The Z-risk index and a three-factor Capital Asset Pricing Model (CAPM) are adopted to estimate the probability of insolvency, systematic bank risks and unsystematic bank risks. The results demonstrate that banks in East Asian countries are exposed to a variety of risk exposures. Also, the findings show that banks with lower unsystematic risks do not necessarily have lower insolvency risks, indicating that the sources of insolvency risk are complicated and need further research. Finally, a regional cooperation strategy among banks is suggested so that exchange rate and interest rate risks can be reduced.

Keywords

debt market; East Asian banks; foreign exchange market; insolvency risk; stock market; three-factor CAPM

Citation

Tamadonnejad, A., Abdul-Rahman, A. A., Abdul-Majid, M., & Jusoh, M. (2014). Bank Risk Exposures in the East Asian Region. Jurnal Pengurusan, 40, 83–89.

@article{tamadonnejad2014bank,
  title={Bank Risk Exposures in the East Asian Region},
  author={Tamadonnejad, Alireza and Abdul-Rahman, Aisyah and Abdul-Majid, Mariani and Jusoh, Mansor},
  journal={Jurnal Pengurusan},
 

volume={40},
  number={},
  pages={83—89},
  year={2014},
  doi={},
  publisher={Penerbit UKM},
}

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40 (2014) 83 – 89

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