Product Diversification And Bank Risk Taking Behavior: An Empirical Evidence From Indian Banking System

Jugnu Ansari

Working Papers from Centre for Advanced Financial Research and Learning (CAFRAL)

Abstract: This study examines the relationship between product diversification and bank risk taking behavior in India over the period of 2001–2014. Our analysis shows clear evidence that the effect of risk taking behavior through product diversification depends highly on the bank’s size and ownership. The degree of product diversification is negatively associated with bank risk taking behavior for small-sized banks as compared large-sized banks. We found that ownership does matter in the pursuit of product diversification. Relative to private domestic banks, public sector banks earn significantly less fee-income but more income from other off-balance sheet activities. From a regulatory perspective, it appears that diversification benefits public sector banks. This finding suggests that deregulation encouraging banks to become more involved in non- traditional activities may have an adverse effect on the overall banking system where large-sized banks are playing a significant role in India.

Keywords: Non-interest income; Diversification; Risk in banking; Ownership (search for similar items in EconPapers)
JEL-codes: G15 G21 G28 (search for similar items in EconPapers)
Pages: 24
Date: 2015-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cafral.org.in/sfControl/content/Speech ... n-banking-system.pdf
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.cafral.org.in:443 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:cafral:022343

Access Statistics for this paper

More papers in Working Papers from Centre for Advanced Financial Research and Learning (CAFRAL) Contact information at EDIRC.
Bibliographic data for series maintained by Vijayshree ().