Diversification, bank risk taking and performance: evidence from Tunisian banks

Khadija Mnasri and Ezzeddine Abaoub

International Journal of Monetary Economics and Finance, 2010, vol. 3, issue 1, 13-32

Abstract: In this paper, we carry out an empirical study for the Tunisian market to shed light on the question whether the observed shift into non-interest income activities improves performance of commercial banks. Our main results can be summarised in three statements: banks diversified across both interest and non-interest income generating activities have higher levels of raw share returns than those focusing their activities; focusing into non-interest generating activities decreases market profitability of banks; banks that are functionally diversified also experience higher relative levels of systematic risk while the effect on the idiosyncratic risk component is non-significant.

Keywords: portfolio theory; product diversification; interest income; non-interest income; banks; banking; Tunisia; systematic risk; performance; panel data; share returns; market profitability; idiosyncratic risks; monetary economics; finance. (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmefi:v:3:y:2010:i:1:p:13-32

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