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

Ezzeddine Abaoub and Khadija Mnasri ()
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Ezzeddine Abaoub: UTM - Tunis El Manar University [University of Tunis El Manar] [Tunisia] = Université de Tunis El Manar [Tunisie] = جامعة تونس المنار (ar)
Khadija Mnasri: Université de Tunis

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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; risk; performance; banking; panel data (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

Published in Int. J. Monetary Economics and Finance, 2010, 3, ⟨10.2139/ssrn.1309136⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02999675

DOI: 10.2139/ssrn.1309136

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