Bank Diversification in Emerging Markets

Résumé du livre

This paper investigates the implications of product diversification on bank profitability and risk, using a panel sample of commercial banks in 25 emerging markets for the period 2003-2013. Combining income structure and asset structure approaches, I find evidence suggesting that diversification reduces bank profitability while the effect on bank risk is inconclusive. By further examining how the degrees of income and asset diversification are determined by ownership, macro economic conditions and banking regulations, I demonstrate that the impact of diversification is highly approach-dependent, as the results indicate that the income structure is more subject to macro and regulatory environment whereas asset structure remains stable and resilient.