The effects of off-balance sheet accounts on the risk exposure, profitability, liquidity and leverage of publicly listed banks in the Philippines for the period 2010-2016

Off-balance sheet accounts (OBS) have become a way for banks to generate income. However, with the growth of banks' engagement in OBS accounts, it poses risks for the financial institutions. Thus, this study investigated the effect of OBS accounts on banks' performance which includes risk exposure, profitability, liquidity, and leverage over the period of 2010 to 2016 with the exclusion of the earlier years due to the instability of banks after the global financial crisis in 2008. The data was gathered from the top 8 universal banks as to total assets in 2016 listed in the Philippine Stock Exchange. In order to determine the effects of OBS accounts and unsystematic risk. On the other hand, the relationship of OBS activities and market risk was found to be insignificant. In terms of profitability, stock return was found to negatively affect OBS activities, while return on equity was found to positively affect OBS activities. Moreover, both leverage and liquidity were found to negatively affect OBS accounts.