The banks improved profitability (ROA) by selling their loans receivable portfolio to the capital market to get liquidity. Furthermore, the bank significantly changed the role of acting as intermediaries between borrowers and depositors for the last decade. The authors used a sample of 12 commercial banks from Southeast Asian Countries and the regression model used for panel data analysis from 1998 to 2018.
The results show that Asset-backed securities have found a significant positive Return on Assets. However, some empirical evidence found that asset securitization increases Profitability decreases Loan Loss Provisions and reduces bank securitization’s default risk.
For future research, it is recommended to explore several variables to get a better result bank’s financial performance, such as Return on Equity, Debt to Equity Ratio, and Net Interest Margin.
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