Multimarket Contact, Income Diversification and Bank Performance

2021 ◽  
pp. 1-17
Author(s):  
Khanh Hoang ◽  
Liem Nguyen ◽  
Son Tran
Keyword(s):  
Bank Performance ◽  
Income Diversification ◽  
Multimarket Contact

Dynamics of income diversification and bank performance in India

2019 ◽  
Vol 12 (3) ◽  
pp. 383-407
Author(s):  
Harishankar Vidyarthi
Keyword(s):  
Panel Data ◽  
Performance Indicator ◽  
Stock Exchange ◽  
Scale Efficiency ◽  
Bank Performance ◽  
Tobit Regression ◽  
Income Diversification ◽  
Content Type ◽  
Data Framework ◽  
Indian Banks

Purpose The purpose of this paper is to examine the dynamics between income diversification and performance (cost, profit, revenue, technical, pure technical and scale efficiency) for 38 listed Indian banks within panel data framework during the period 2004-2005 to 2015-16. Design/methodology/approach This study computes bank’s cost, profit, revenue, technical, pure technical and scale efficiency within intermediation approach with data envelopment analysis (DEA) as a performance indicator, followed by exploring the association between income diversification and bank performance using truncated Tobit regression within panel data framework. Findings Tobit regression results revealed inverted U-shaped relationship between the income diversification and estimated efficiency parameters for the overall panel. Size and bank intermediation ratio seems to be a major factor in exploiting the potential benefits of income diversification. The author reconfirmed the inverted U-shaped relationship with these efficiency parameters for exclusive subsamples consisting of government-owned and private sector banks. Research limitations/implications Inverted U-shaped relationship between the income diversification and estimated efficiency parameters suggest that banks should go for limited diversification to improve performance. Thus, regulators and banks should pursue limited diversification strategy for improving banking efficiency. Originality/value This study computes bank performance (cost, profit, revenue, technical, pure technical and scale efficiency) based on DEA followed by exploring the association between performance and income diversification for 38 Bombay stock exchange listed banks.

scholarly journals Are the effects of market concentration and income diversification on banking performance persistent?

2020 ◽  
Vol 24 (50) ◽  
pp. 25-44
Author(s):  
Jorge A. Muñoz Mendoza ◽  
Sandra M. Sepúlveda Yelpo ◽  
Carmen L. Veloso Ramos ◽  
Carlos Delgado Fuentealba
Keyword(s):  
Economic Crisis ◽  
Banking Industry ◽  
Market Concentration ◽  
Bank Performance ◽  
Financial Policy ◽  
Income Diversification ◽  
Gmm Estimator ◽  
Linear Effect ◽  
Non Linear Effect ◽  
Positive Effect

We analyze the effects of market concentration and income diversification on banking performance. We used a sample of 134 countries for the period 1994-2011 and used the GMM estimator proposed by Arellano and Bover (1995). Our results show that market concentration and income diversification have a positive and non-linear effect on bank performance. The non-linearity suggests that the positive effect is reversed if the banking industry has high levels of market concentration and income diversification. During an economic crisis, the banking industry reduces diversification to support its performance. These results are relevant for the design of financial policy and banking strategies.

scholarly journals Are the effects of market concentration and income diversification on banking performance persistent?

2020 ◽  
Vol 24 (50) ◽  
Author(s):  
Jorge A. Muñoz Mendoza ◽  
Sandra M. Sepúlveda Yelpo ◽  
Carmen L. Veloso Ramos ◽  
Carlos Delgado Fuentealba
Keyword(s):  
Economic Crisis ◽  
Banking Industry ◽  
Market Concentration ◽  
Bank Performance ◽  
Financial Policy ◽  
Income Diversification ◽  
Gmm Estimator ◽  
Linear Effect ◽  
Non Linear Effect ◽  
Positive Effect

We analyze the effects of market concentration and income diversification on banking performance. We used a sample of 134 countries for the period 1994-2011 and used the GMM estimator proposed by Arellano and Bover (1995). Our results show that market concentration and income diversification have a positive and non-linear effect on bank performance. The non-linearity suggests that the positive effect is reversed if the banking industry has high levels of market concentration and income diversification. During an economic crisis, the banking industry reduces diversification to support its performance. These results are relevant for the design of financial policy and banking strategies.

Income diversification and bank performance: evidence from BRICS nations

2018 ◽  
Vol 67 (9) ◽  
pp. 1625-1639 ◽  
Author(s):  
Shweta Sharma ◽  
Anand Anand
Keyword(s):  
Generalized Method Of Moments ◽  
Structural Response ◽  
Bank Performance ◽  
Income Diversification ◽  
Diversification Discount ◽  
Data Set ◽  
Content Type ◽  
Brics Countries ◽  
And Performance ◽  
The Impact

PurposeThe purpose of this paper is to examine the impact of income diversification on bank performance in BRICS countries as a structural response to concentration risk. The authors argue that effectiveness of this approach is conditional upon its extent and quality. To understand the role of firm-specific characteristics on effectiveness of diversification, the authors examine this relationship across asset sizes.Design/methodology/approachAn unbalanced panel data set of 169 BRICS banks is sampled over the period 2001–2015. Fixed effect models and system generalized method of moments techniques are used to test the relationship between diversification and bank performance using alternate measures.FindingsResults indicate a positive relationship between diversification and performance measured in terms of bank risk and returns for medium and large size banks. However, for small banks this relationship is negative suggesting a “diversification discount.”Originality/valueThe study indicates that diversification as a risk mitigating tool can be effective but the managers and regulators should not emphasize on the “one-size-fits-all” approach for all banks. Policy frameworks for controlling concentration risk should be developed keeping in mind factors like bank size, customer base and financial leverage which brings variations to the risk profile of banks.

scholarly journals DIVERSIFIKASI PENDAPATAN, KEPEMILIKAN PEMERINTAH, KINERJA DAN RISIKO BANK

2018 ◽  
Vol 15 (1) ◽  
Author(s):  
Rahmat Setiawan ◽  
Annisa Shabrina
Keyword(s):  
Standard Deviation ◽  
Bank Risk ◽  
Bank Performance ◽  
Return On Assets ◽  
Income Diversification ◽  
Data Set

This study investigates the effect of income diversification on bank performance and risk for government owned banks in Indonesia. This study uses return on assets (ROA) for bank performance and standard deviation of return on assets (SDROA) for bank risk. Using a data set of government owned banks in Indonesia during the period 2012-2016, we find evidence that income diversification is positively related to bank performance (ROA). Income diversification is positively related to bank risk. We find that income diversification increases performance and also risk for government owned banks. Tujuan dalam penelitian ini adalah untuk mengetahui adanya pengaruh diversifikasi pendapatan terhadap kinerja dan risiko bank. Pengukuran pada penelitian ini menggunakan return on assets (ROA) untuk mengukur kinerja dan  standar deviasi return on assets (SDROA) untuk mengukur risiko bank. Penelitian ini menggunakan sampel bank milik pemerintah selama periode 2012-2016. Penelitian ini menunjukkan hasil bahwa terdapat pengaruh positif signifikan diversifikasi pendapatan terhadap kinerja bank.  Implementasi strategi diversifikasi pendapatan juga berpengaruh positif signifikan terhadap risiko bank. Penelitian ini menunjukkan bahwa diversifikasi pendapatan tidak hanya meningkatkan kinerja namun juga risiko bank milik pemerintah.

Income Diversification and Bank Performance: Evidence from Italian Banks

2008 ◽  
Vol 33 (3) ◽  
pp. 181-203 ◽  
Author(s):  
Vincenzo Chiorazzo ◽  
Carlo Milani ◽  
Francesca Salvini
Keyword(s):  
Bank Performance ◽  
Income Diversification

scholarly journals BENEFIT FROM INCOME DIVERSIFICATION OF VIETNAMCOMMERCIAL BANKS

2017 ◽  
Vol 33 (2) ◽  
Author(s):  
Dinh Nguyen
Keyword(s):  
Stock Market ◽  
Commercial Banks ◽  
Business Environment ◽  
Bank Performance ◽  
Income Diversification ◽  
Insolvency Risk ◽  
Empirical Results ◽  
Positive Effects ◽  
Income Generating Activities ◽  
The Relationship

In this study, relationship between non-interest income generating activities (income diversification) and bank performance is investigated by using an unbalanced panel dataset of ten commercial banks listed on Vietnam stock market during the period 2007–2016. Our empirical results indicate that income diversification decrease insolvency risk and enhance performance of listed banks and the relationship between income diversification and bank performance is non-linear. In addition to be affected by factors of income diversification, bank performance is also affected by banks’ characteristics and business environment factors. Bank size, deposit on total liabilities ratio, the first lags risk adjusted returns have positive effects on bank performance while the effect of enforcement index on bank performance is negative. Keywords: Income diversification, bank performance, banks

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