scholarly journals The Impact of Income Diversification and Non-Interest Income Diversification on Indonesian Bank Performance, 2012-2017

2021 ◽  
Author(s):  
Dediek Tri Kurniawan ◽  
Ely Siswanto
Keyword(s):  
Bank Performance ◽  
Income Diversification ◽  
Interest Income ◽  
The Impact

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 Income Diversification and its Impact on Profitability of Banks

2019 ◽  
Vol 8 (4) ◽  
pp. 11575-11585
Keyword(s):  
Financial Crisis ◽  
Goodness Of Fit ◽  
Global Financial Crisis ◽  
Positive Impact ◽  
Good Effect ◽  
Growth Trend ◽  
Income Diversification ◽  
Income Sources ◽  
Interest Income ◽  
The Impact

The paper is studying diversification in income of Indian banks and impact of income diversification on profitability and sustainability of industry, mainly in environment shift of recent financial crisis. Statistical analysis: The study is a multivariate regression analysis to find diversification score on the secondary data for Indian banking industry for sample period of 10 years, from 2008 to 2017. Score of diversifications are calculated at two stages as DS (1), DS (2) to find share of nontraditional income in total income and categorization in nontraditional income respectively. The impact on the different income categories ; Share of Non- Interest Income(SNI), Share of fee Based Income (S FI), Share of Other Income(SOT), are tested against selected control variables. F-test used to test hypothesis as direct association with two set of variables. Further criterion scores techniques (SIC), (AIC) and (HQIC) are use as model improvement to test goodness of fit of the model. The study found that income shift of new business lines helps banks to improve their profitability by dint of many barriers in implementation. The growth trend of such income is not stable during whole study period, majorly due to global financial crisis. In the library of literatures, the share of non-interest based income activities and fee based income sources has been more distinct for Private and Foreign banks, even though SBI and Its associate’s banks are not far behind them. The role of the study to highlight the path for banks adopting new Non-interest income streams to enhance profitability and continuity in profitability. As reported, diversification in non-interest income sources may have positive impact on overall profitability and risk-adjusted performance along with improvement in stability of banking system. Other non-interest incomes are more changeable in compare to Fee based income generated by fee, commission and brokerage activity. By dint of many good effect of diversification banks, mainly in Indian context should take appropriate majors while diversification of its income.

scholarly journals Corporate Governance of Banks in Poland and Slovenia

2016 ◽  
Vol 62 (3) ◽  
pp. 3-12 ◽  
Author(s):  
Polona Pašić ◽  
Borut Bratina ◽  
Mejra Festić
Keyword(s):  
Corporate Governance ◽  
Regression Analysis ◽  
Bank Performance ◽  
Interest Income ◽  
Governance Index ◽  
The Impact ◽  
Research Show

Abstract This paper focuses on the analysis of the characteristics of corporate governance in banks in Poland and Slovenia between 2005 and 2013. It studies the impact of corporate governance in these banks on their performance. The results of our research show that Slovenia achieved lower average scores for the variables and indicators related to the transparency of corporate governance than Poland. The density of banks with the highest corporate governance index scores was higher in Poland than in Slovenia. When examining the impact of corporate governance on bank performance as measured with net interest income, the regression analysis showed that its impact is positive in both countries and that it is statistically significant in Slovenia.

scholarly journals Effect of Income Diversification on Risk-Adjusted Profitability of Commercial and Development Banks in Nepal

2019 ◽  
Vol 4 (2) ◽  
pp. 35-51
Author(s):  
Rubina Prajapati ◽  
Ajay Kumar Shah
Keyword(s):  
Regression Analysis ◽  
Commercial Banks ◽  
Negative Impact ◽  
Positive Impact ◽  
Debt Ratio ◽  
Income Diversification ◽  
Interest Income ◽  
Significant Negative Impact ◽  
Development Banks ◽  
The Impact

This study analyses the impact of income diversification on risk adjusted profitability of commercial and development banks in Nepal. Risk adjusted profitability is measured in terms of risk adjusted return on assets (RAROA) and risk adjusted return on equity (RAROE). The regression analysis shows Herfindahl Hirschman Index (HHI), equity multiplier, non-interest income and foreign holding have significant positive impact on RAROE of commercial banks. Whereas the size of commercial banks has a significant negative impact on RAROE. There is a significant positive impact of HHI, non-interest income on RAROA in case of commercial banks. Size of commercial banks also has a significant negative impact on RAROA. Debt ratio does not have significant impact in case of RAROE of commercial banks and equity multiplier, debt ratio and foreign holding do not have significant impact on RAROA of commercial banks. The regression analysis of development banks showed there is significant positive impact of HHI and equity multiplier on RAROE of development banks. The study concludes that income diversification, non-interest income and size of the commercial banks are the major determinants of risk adjusted profitability of commercial banks.

scholarly journals Human capital, income diversification and bank performance–an empirical study of East African banks

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peter Nderitu Githaiga
Keyword(s):  
Human Capital ◽  
East Africa ◽  
Control Variable ◽  
Bank Performance ◽  
Income Diversification ◽  
Content Type ◽  
Bank Managers ◽  
The Impact ◽  
The Relationship ◽  
Positive Effect

PurposeThe purpose of this paper is to examine whether income diversification moderates the relationship between human capital and bank performance.Design/methodology/approachThe study uses a sample of 53 banks and panel data for the years 2010–2018. The hypotheses are tested through hierarchical multiple regression and the choice between fixed effect and random effect estimation is based on the results of the Hausman test.FindingsThe study finds that human capital and income diversification significantly influence bank performance; however, the direction of the causality varies. While human capital has a positive effect, income diversification has a negative effect. Additionally, the interaction term has a negative and significant effect on bank performance, inferring that income diversification has an antagonistic effect on the human capital and bank performance relationship. For the control variable, liquidity and asset quality negatively affects bank performance while capitalization has a positive effect.Research limitations/implicationsHuman capital was measured as human capital efficiency (HCE), which is a quantitative measure of human capital, hence future studies can use qualitative measures. Also, the study focused on commercial banks in East Africa, future researcher may possibly consider other regions and industries, which would shed more insights.Practical implicationsThe results of this paper provide valuable insights. Bank managers can get a better understanding of the impact of human capital on bank performance, and the need to invest more in human capital development. Further, the study cautions bank managers that engaging in non-lending activities might destroy the economic value of human capital and ultimately lower performance. The study also recommends that policymakers should address the obstacles to banks' income diversification, for instance relaxing regulations restricting diversification; this might enable banks to leverage related financial service activities for optimal utilization of human capital and improve banks' profitability.Originality/valueWhile a good number of previous studies investigated the direct effect of human capital and income diversification on the performance of banks, this study examines the moderating role of income diversification on the relationship between human capital and performance of banks in East Africa.

scholarly journals Noninterest Income and Financial Performance at Jordanian Banks

2016 ◽  
Vol 8 (1) ◽  
pp. 166
Author(s):  
Alaaeddin Al-Tarawneh ◽  
Bashar K. Abu Khalaf ◽  
Ghazi Al Assaf
Keyword(s):  
Financial Performance ◽  
Equity Capital ◽  
Bank Loans ◽  
Capital Adequacy ◽  
Size Increase ◽  
Bank Performance ◽  
Interest Income ◽  
The Impact

This paper investigated the impact of noninterest income on the performance of 13 banks in Jordan during the period 2000-2015. The impact of size of bank, loans, capital adequacy and general expenses on banks performance found to have a significant impact on banks performance. In more details, general expenses decrease bank performance, while capital adequacy, loans and size increase it. In addition, non-interest income increases equity capital adequacy and this in turn affects the profitability positively.

scholarly journals Effects of Income Diversification and Financial Performance of Kenyan Commercial Banks.

2021 ◽  
Vol 04 (08) ◽  
Author(s):  
Timothy Kipkogei Kiptum ◽  
Keyword(s):  
Financial Performance ◽  
Banking Sector ◽  
Income Diversification ◽  
Bank Profitability ◽  
Interest Income ◽  
Bank Managers ◽  
Effect Regression ◽  
Specific Factors ◽  
Motivating Factor ◽  
The Impact

This paper aims at examining the impact of income diversification on financial performance. The motivating factor is an occasion by raising pursuance of interest activities and fluctuations of profitability among banks due to the declining interest income and stiff competition. Design/methodology/approach – This study uses a sample of 31 Kenyan banks and data for the period 2008-2019. Data is analyzed through fixed-effect regression analysis. Findings – The study finds that income diversification improves bank profitability. The findings are attributable to an increase in non-interest income and possible risk diversification. Moreover, the study controls for several banking sector-specific factors that affect financial performance. The results show bank size, age, loan portfolio quality, lending strategy, and market share have a significant effect. Research implications – Based on the results, the study recommends that bank managers should consider engaging in non-traditional activities that generate non-interest income to compensate for deteriorating interest income and to boost performance. In addition, the study recommends that bank regulators should relax rules that limit the extent to which banks can engage in non-interest earning activities

Australian Specific Bank Features and the Impact of Income Diversification on Bank Performance and Risk

2015 ◽  
Vol 54 (2) ◽  
pp. 63-87 ◽  
Author(s):  
Piyadasa Edirisuriya ◽  
Abeyratna Gunasekarage ◽  
Michael Dempsey
Keyword(s):  
Bank Performance ◽  
Income Diversification ◽  
The Impact
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