Impact of Income and Assets Diversification on Bank Performance in Serbia

Radojičić Jelena () and Marinković Srđan ()
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Radojičić Jelena: University of Niš, Faculty od Economics, Republic of Serbia
Marinković Srđan: University of Niš, Faculty od Economics, Republic of Serbia

Economic Themes, 2023, vol. 61, issue 2, 197-214

Abstract: The paper explores the relationship between the diversification of bank activities and a set of bank performance indicators by running multiple regression on panel data set of 22 operating banks in Serbia in the time period spanning the last 15 reporting years. We have found a positive influence of the degree of diversification, measured both by income composition and earning assets composition indicators, on the levels and stability of the banks’ return on equity. For ROA-related performance measures the relationship is not conclusive. We have also tested whether the presence of COVID-19 crisis challenged the observed regularity and confirmed that it has had tendency to reverse the long-term relationship.

Keywords: bank profitability; income diversification; assets diversification; noninterest income; COVID-19 (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecothe:v:61:y:2023:i:2:p:197-214:n:3

DOI: 10.2478/ethemes-2023-0010

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