Media reputation: a source of banks' financial performance
International Journal of Bank Marketing
ISSN: 0265-2323
Article publication date: 28 July 2020
Issue publication date: 19 August 2020
Abstract
Purpose
Based on the resource-based view (RBV) and the signaling theory, this paper examines the effect of media reputation on financial performance as well as the moderating role of bank characteristics (risk management and financial capacities) in this relationship, using Vietnamese commercial bank data for the period 2007–2018.
Design/methodology/approach
We rely on the agenda-setting theory to measure the media reputation of banks. Return on average equity (ROE) is used as a proxy of financial performance. We regress financial performance on media reputation with fixed effects to control unobserved variables. In addition, the instrumental variable (IV) method is applied to deal with the endogeneity problem. We use the change in bank logo as an IV for media reputation.
Findings
We find that media reputation has a positive effect on financial performance. This effect becomes prominent for large banks, listed banks or banks that demonstrate good risk management capacities, and is particularly strong when we control for endogeneity bias. The effect of media reputation on financial performance is transmitted through the non-performing loan (NPL) channel.
Research limitations/implications
The research findings further endorse the positive impact of media reputation on financial performance in the low-quality institutional settings. Moreover, these findings expand the existing knowledge regarding the relationship between media reputation and financial performance by affirming two strategies which could be used to leverage the contribution of media reputation including improving banks' risk management capacities and raising financial capital.
Originality/value
This is the first known paper to examine the effect of media reputation on financial performance in commercial banks in an underdeveloped institutional setting while exploring the moderators in this relationship. This study, therefore, provides insightful implications for different bank segments in managing NPL and taking advantage of media reputation as a potential resource of financial performance.
Keywords
Acknowledgements
We would like to thank Vietnam Banking Academy for funding this research and reviewers at the International Journal of Bank Marketing for valuable comments.
Citation
Doan, N.T., Hoang, D.P. and Pham, A.H.T. (2020), "Media reputation: a source of banks' financial performance", International Journal of Bank Marketing, Vol. 38 No. 6, pp. 1399-1419. https://doi.org/10.1108/IJBM-02-2020-0047
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited