Determinants of Off-Balance Sheet Usage: Emerging Markets Evidence from Bank Level Data

This paper tests for the factors determining the diffusion of off-balance sheet businesses within the context of emerging markets. The pooled balanced panel data model has been applied on a large sample of banks over the period 1997-2015. For the six GCC countries considered, though the estimates conclude differences among the regressors, however, the targeted determining factors contribute significantly in influencing OBS businesses in several terms. As capital market perspective, the findings indicate the requisite to develop the derivatives market in the GCC region, while prudential authorities have to provide more spotlight on banks asset/liability management practices where banks need to re-assess their OBS positions as part of their overall portfolio management strategies. This paper contributes to the literature by empirically testing for the OBS determining factors within an emerging market settings, likewise extending the empirical literature by considering not only banks-specific factors but also general macroeconomic conditions and regulatory variables attributes.

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