Implications of loan portfolio concentration in Cambodia

This paper explores how the composition of banks' loan portfolios affect banks operating in Cambodia. The implications of loan portfolio concentration has begun to attract attention in recent years. However, existing studies remain focus on developed or emerging countries because data in other developing countries are lacking. In this paper, we fill this gap by investigating the effects of loan portfolio concentration on Cambodian banks' return. We find that sectoral diversification is positively related to banks' returns. In addition, foreign banks and commercial banks are less affected by loan concentration than their counterparts.