Please use this identifier to cite or link to this item: http://idr.iimranchi.ac.in:8080/xmlui/handle/123456789/403
Title: Income diversification and bank performance: evidence from BRICS nations
Authors: Sharma, Shweta.
Anand.
Keywords: Concentration risk
Risk management
Bank performance
BRICS
Income diversification
IIM Ranchi
Issue Date: Sep-2018
Publisher: Emerald Publishing Limited
Citation: Sharma, S., & Anand (2018). Income diversification and bank performance: evidence from BRICS nations. International Journal of Productivity and Performance Management, 67(9), 1625-1639.
Abstract: Purpose:The 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/approach : An 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. Findings : Results 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/value : The 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.
URI: https://doi.org/10.1108/IJPPM-01-2018-0013
http://10.10.16.56:8080/xmlui/handle/123456789/403
ISSN: 17410401
Appears in Collections:Journal Articles

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