Diversification, bank risk taking and performance : evidence from Tunisian banks Article - 2010

Ezzeddine Abaoub, Khadija Mnasri

Ezzeddine Abaoub, Khadija Mnasri, « Diversification, bank risk taking and performance : evidence from Tunisian banks  », Int. J. Monetary Economics and Finance, 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.

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