|This paper analyzes how the growing volume of a bank and competitive expansion of loan business affect banks`` asset quality and profitability, based on domestic banks`` annual panel data since 2000. Noting that there is a time lag before a loan deteriorates into non-performing debt, the study adopted lagged variables and conducted an empirical analysis. It also examined whether nominal GDP growth rate could be a meaningful guideline for ``adequate`` pace of loan expansion, and whether relatively faster loan growth affected asset quality or profitability. The analysis results provided suggestions for domestic banks`` growth strategy. First, the impact of a bank`s size on asset quality was unclear as was shown in previous studies. However, the analysis found out that if a bank extended loans rapidly, its asset quality was negatively affected after one or two years. Meanwhile, it was hard to decide whether the loan growth rate that exceeds either nominal GDP growth rate or banks`` average loan growth rate further affected asset quality. Second, the growing volume of a bank or expansion of loan business eroded the bank`s profitability after some time. These suggest that when a domestic bank hastily expands loan business, its asset quality is likely to deteriorate after some time, and the profits from loan business are insufficient to compensate for the degraded asset quality.