EconPapers    
Economics at your fingertips  
 

Diversification, bank performance and risk: have Tunisian banks adopted the new business model?

Helmi Hamdi (), Abdelaziz Hakimi () and Khemais Zaghdoudi ()
Additional contact information
Khemais Zaghdoudi: University of Jendouba, Faculty of Law, Economics and Management of Jendouba

Financial Innovation, 2017, vol. 3, issue 1, 1-25

Abstract: Abstract Background The objective of this paper is threefold. First, we test the most important factors that determine the level of non-interest income for Tunisian banks. Second, we study the impact of non-interest income on banks’ profitability measured by both return on assets (ROA) and return on equity (ROE). Finally, we investigate the relationship between non-interest income and the level of risk taking. Methods To achieve this goal, we used annual data of 20 Tunisian banks during the period 2005-2012. In the empirical section we performed a Dynamic Panel Data model. Results Empirical results indicate that the main determinants of non-interest income are: relative performance (RROA and RROE), bank size, loan specialization and new e-payments channels, automatic teller machine (ATM) and credit cards). We also find that diversification increases bank performance for both ROA and ROE measures. Eventually, non-interest income appears to be negatively and significantly correlated with the effect on the level of risk. Conclusions Tunisian banks are invited to more diversify their activities and do not focus only on the traditional activity. The noninterest income seems to be associated with a higher level of profitability and a lower risk.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1186/s40854-017-0069-6 Abstract (text/html)

Related works:
Working Paper: Diversification, bank performance and risk: have Tunisian banks adopted the new business model? (2017)
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:spr:fininn:v:3:y:2017:i:1:d:10.1186_s40854-017-0069-6

Ordering information: This journal article can be ordered from
http://www.springer. ... nomics/journal/40589

DOI: 10.1186/s40854-017-0069-6

Access Statistics for this article

Financial Innovation is currently edited by J. Leon Zhao and Zongyi

More articles in Financial Innovation from Springer, Southwestern University of Finance and Economics
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-08-31
Handle: RePEc:spr:fininn:v:3:y:2017:i:1:d:10.1186_s40854-017-0069-6