Diffusion of off-balance-sheet financial innovations: Information complementarity and market competition

King Fai Fung, Cheuk Sang Cheng

Research output: Journal article publicationJournal articleAcademic researchpeer-review

9 Citations (Scopus)

Abstract

By studying the Hong Kong banking industry, the objective of this study is to examine the role of information complementarity and market competition in governing the diffusion of off-balance-sheet (OBS) financial innovations. Specifically, two OBS financial innovations are information complementary if the adoption of one lowers the uncertainty of adopting another. In addition, market competition may speed up the diffusion of OBS financial innovations because competitive firms are able to capture the full profit potential from successful innovations. A simultaneous equation model is devised to estimate the impacts of information complementarity, market competition, and a number of other factors on the diffusion of OBS financial innovations. Results of estimation suggest that information complementarity and market competition are the primary driving forces behind the diffusion process.
Original languageEnglish
Pages (from-to)525-540
Number of pages16
JournalPacific Basin Finance Journal
Volume12
Issue number5
DOIs
Publication statusPublished - 1 Nov 2004

Keywords

  • Banking
  • Diffusion
  • Financial innovation
  • Off-balance-sheet activities

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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