Market reaction to banks revenue diversification strategy: evidence from India

Nagaraju Thota

Applied Economics Letters, 2020, vol. 27, issue 1, 25-29

Abstract: This paper examines whether revenue diversification by banks is beneficial using data from India for the period 1995–2018. We use non-interest income to total income ratio as a measure of revenue diversification, and use market measures of returns and risk to evaluate the benefits. The results indicate that a higher share of non-interest income in total income leads to a higher market return and lowers the market risk. These results broadly remain the same even when we divide the sample into public (government owned) and private banks.

Date: 2020
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DOI: 10.1080/13504851.2019.1606400

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