Evaluating the impact of competition on the profitability and the stability of the commercial banking sector: A case of selected Asian countries (2008-2020)

The study aimed to assess the impact of competition on profitability and stability within selected top banks from the seven Asian countries across a 13-year time period (2008 to 2020), by utilizing tests such as the Econometric Model, Panel Unit Root Tests, Panel Co-Integration Test, and Granger Causality Test to achieve the results. Through the study, it was found that competition significantly impacted the profitability of South Korea’s and Singapore’s banking sector during the Global Financial Crisis (GFC), South Korea’s banking sector after the GFC, and South Korea’s, Thailand’s and Singapore’s banking sector during the COVID-19 pandemic. Additionally, competition significantly impacted the stability of Taiwan, China’s and Indonesia’s banking sector during the GFC, Taiwan, China’s and Singapore’s banking sector after the GFC, and Taiwan, China’s, Singapore’s, and Malaysia’s banking sector during the COVID-19 pandemic. The findings of the study would be able to aid policymakers in constructing policies aimed at stimulating profitability and stability within the banking sector, given the amount of competition that exists within it. Regulators and banks would be able to learn from other banking systems included in the study that have successfully maneuvered through crises and recovery periods. Bank clients would be able to prepare funds for future crises and understand how banks keep themselves stable and profitable especially during crises