Diversification, bank risk taking and performance: evidence from Tunisian banks
by Khadija Mnasri, Ezzeddine Abaoub
International Journal of Monetary Economics and Finance (IJMEF), Vol. 3, No. 1, 2010

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.

Online publication date: Thu, 03-Dec-2009

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