The Effect of Asset Securitization on Bank Profitability in Southeast Asia

Abstract

Purpose: This study examines whether asset securitization is associated with bank profitability in Southeast Asia and develops a regional explanation of the relationship.

Research Method: The study uses an unbalanced panel of 82 publicly listed banks and 838 bank-year observations over 2009–2021. Asset securitization is measured as a dummy variable, while profitability is measured by ROA and ROE. The models include bank size, Tobin’s Q, GDP growth, and year effects and are estimated using Generalized Least Squares (GLS).

Results and Discussion: Asset securitization is positively and significantly associated with ROA (β=0.001018; p=0.017) and ROE (β=0.010352; p<0.001). The result is consistent with liquidity, funding, and intermediation-capacity mechanisms, while the literature also indicates possible selection and risk channels.

Implications: The findings are relevant to bank balance-sheet management and regulatory oversight of securitization.

Originality: The article provides a full-length regional analysis of publicly listed Southeast Asian banks over 2009–2021 using two profitability measures and explicit controls for bank and macroeconomic characteristics.