Diversification and Bank Risk: A Dynamic Panel Data Analysis of Deposit Banks in Turkey

Haşmet Sarıgül
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Haşmet Sarıgül: İstanbul Esenyurt University

Journal of Finance Letters (Maliye ve Finans Yazıları), 2024, vol. 39, issue 121, 51-69

Abstract: This study investigates the effects of asset, income, and funding diversification on the risk the risks of twenty deposit banks operating in Turkey by using annual data from 2005 to 2021. The GMM estimations of dynamic panel-data model show that asset and funding diversifications positively impact the Z-scores which are used as risk indicators of banks. In other words, diversification of asset and fund sources significantly reduces banks' risks. Income diversification has not been found to have a significant impact on the deposit banks risks.

Keywords: Diversification; Risk; Deposit Banks in Turkey; Panel Data; GMM. (search for similar items in EconPapers)
JEL-codes: C33 G21 L25 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:acc:malfin:v:39:y:2024:i:121:p:51-69

DOI: 10.33203/mfy.1241006

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