The Impact of Revenue Diversification on Bank Profitability and Stability: Empirical Evidence from South Asian Countries
Abstract
:1. Introduction
2. Literature Review and Hypotheses Development
3. Data and Variables
3.1. Data
3.2. Variables Definitions
4. Methodology
5. Results and Discussion
5.1. Revenue Diversification and Bank Profitability
5.2. Revenue Diversification and Bank Stability
5.3. Robustness of Results
6. Conclusions
Author Contributions
Conflicts of Interest
References
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No. | Country Name | No. of Banks | Listed | Unlisted | Public | Private | Foreign |
---|---|---|---|---|---|---|---|
1 | Afghanistan | 11 | 0 | 11 | 3 | 8 | 0 |
2 | Bangladesh | 33 | 24 | 9 | 5 | 25 | 3 |
3 | Bhutan | 3 | 0 | 3 | 2 | 1 | 0 |
4 | India | 77 | 41 | 36 | 28 | 42 | 7 |
5 | Maldives | 1 | 0 | 1 | 0 | 1 | 0 |
6 | Nepal | 30 | 22 | 8 | 2 | 26 | 2 |
7 | Pakistan | 28 | 20 | 8 | 4 | 22 | 2 |
8 | Sri-Lanka | 17 | 10 | 7 | 3 | 11 | 3 |
Total | 200 | 107 (53.5%) | 93 (46.5%) | 47 (23.5%) | 136 (68%) | 17 (8.5%) |
Statistics | ROA | SHROA | ROE | ZSCORE | FC | CA | NIEAA | LIQ | IA |
Mean | 0.929 | 0.594 | 11.846 | 5.411 | 6.259 | 8.431 | 2.542 | 6.542 | 28.095 |
Std. Dev. | 1.740 | 0.918 | 25.995 | 3.784 | 1.992 | 6.262 | 1.317 | 4.225 | 10.466 |
Statistics | LOA | NPL | NII | NIITA | NII1 | NII2 | II | GDP | Inflation |
Mean | 14.602 | 7.105 | 31.954 | 1.489 | 13.834 | 9.951 | 9.935 | 6.070 | 7.893 |
Std. Dev. | 1.706 | 8.402 | 13.579 | 1.171 | 8.144 | 8.704 | 2.167 | 2.390 | 3.484 |
Variable | ROA | SHROA | ROE | ZSCORE | FC | CA | NIEAA | LIQ | IA | LOA | NPL | NII | NIITA | NII1 | NII2 | II | GDP | Inflation |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ROA | 1.00 | |||||||||||||||||
SHROA | 0.69 | 1.00 | ||||||||||||||||
ROE | 0.57 | 0.45 | 1.00 | |||||||||||||||
ZSCORE | 0.24 | 0.24 | 0.04 | 1.00 | ||||||||||||||
FC | −0.16 | −0.14 | −0.08 | −0.05 | 1.00 | |||||||||||||
CA | 0.08 | 0.05 | −0.06 | 0.70 | −0.03 | 1.00 | ||||||||||||
NIEAA | −0.19 | −0.18 | −0.26 | 0.13 | −0.04 | 0.15 | 1.00 | |||||||||||
LIQ | −0.04 | −0.02 | −0.05 | 0.10 | −0.20 | 0.12 | 0.14 | 1.00 | ||||||||||
IA | −0.05 | −0.03 | 0.01 | −0.11 | −0.03 | −0.10 | 0.04 | −0.24 | 1.00 | |||||||||
LOA | 0.01 | 0.01 | 0.05 | −0.14 | 0.05 | −0.14 | −0.06 | −0.10 | 0.13 | 1.00 | ||||||||
NPL | −0.31 | −0.28 | −0.36 | −0.04 | 0.07 | 0.04 | 0.17 | 0.05 | 0.16 | −0.07 | 1.00 | |||||||
NII | −0.01 | −0.01 | 0.01 | −0.02 | 0.11 | −0.03 | 0.09 | −0.04 | 0.00 | 0.00 | 0.12 | 1.00 | ||||||
NIITA | 0.23 | 0.21 | 0.13 | 0.20 | 0.04 | 0.15 | 0.28 | 0.00 | 0.00 | −0.04 | 0.07 | 0.54 | 1.00 | |||||
NII1 | −0.06 | −0.03 | −0.08 | −0.09 | −0.04 | −0.09 | 0.14 | 0.06 | −0.07 | 0.02 | 0.07 | 0.32 | 0.23 | 1.00 | ||||
NII2 | 0.03 | 0.05 | 0.00 | 0.08 | 0.06 | 0.06 | −0.02 | −0.03 | −0.16 | −0.05 | 0.02 | 0.41 | 0.36 | −0.08 | 1.00 | |||
II | −0.05 | −0.04 | −0.09 | 0.10 | 0.23 | 0.11 | 0.17 | 0.18 | −0.10 | −0.04 | 0.03 | −0.03 | 0.01 | −0.05 | −0.07 | 1.00 | ||
GDP | 0.03 | 0.02 | −0.02 | 0.01 | 0.12 | 0.03 | −0.05 | 0.01 | −0.03 | 0.05 | −0.10 | −0.09 | −0.10 | −0.07 | −0.05 | 0.03 | 1.00 | |
Inflation | −0.04 | −0.03 | −0.10 | 0.06 | 0.04 | 0.08 | 0.06 | −0.02 | −0.01 | 0.05 | −0.04 | −0.17 | −0.15 | −0.11 | −0.10 | 0.02 | 0.14 | 1.00 |
Variable | Measured By | References | Expected Sign |
---|---|---|---|
Return on assets (ROA) | Net profit/Total assets | Chiorazzo et al. (2008) | N/A |
Return on equity (ROE) | Net profit/Total equity | Sanya and Wolfe (2011) | N/A |
Risk-adjusted return on average assets (SHROA) | ROAA/Standard deviation of ROAA (σROAA) | Lee et al. (2014b) Mercieca et al. (2007) Turk-Ariss (2010) Meslier et al. (2014) | N/A |
Return on average assets (ROAA) | Net Profit/Average assets | Lee et al. (2014b) Meslier et al. (2014) | N/A |
Z-Score | (ROAA+CA*)/σROAA** | Nguyen et al. (2012) Sanya and Wolfe (2011) | N/A |
Funding cost (FC) | Interest expenses/Average interest-bearing liabilities | Dietrich and Wanzenried (2011) | − |
Capital adequacy (CA) | Equity/Total Assets | Mercieca et al. (2007) Sanya and Wolfe (2011) Stiroh and Rumble (2006) Chiorazzo et al. (2008) Stiroh (2004b) | + |
Administrative expenses (NIEAA) | Non-interest expenses/Average assets | Nguyen (2012) Zhang and Daly (2013) | − |
Liquidity (LIQ) | Liquid assets/Total assets | Nisar et al. (2015a) Nisar et al. (2015b) | + |
Investments (IA) | Investments/Total assets | Meslier et al. (2014) Nisar et al. (2015b) | + |
Bank size(LOA) | Natural log of total assets | Nguyen (2012) Lee et al. (2014b) | + |
Credit risk (NPL) | Impaired loans/Gross loans | Lee et al. (2014a) Lee et al. (2014b) | − |
Diversification (NII) | Non-interest income/Gross revenues | Meslier et al. (2014) Pennathur et al. (2012) | + |
Diversification (NIITA) | Non-interest income/Total assets | DeYoung and Rice (2004) Nguyen et al. (2012) | + |
Diversification (NII1) | Fee and commission/Gross revenues | Meslier et al. (2014) Lepetit et al. (2008) | − |
Diversification (NII2) | Other non-interest income/Gross revenues | Meslier et al. (2014) Lepetit et al. (2008) Sanya and Wolfe (2011) | + |
Global financial crises (GFC) | Dummy variable for year 2009 | Dietrich and Wanzenried (2011) | − |
GDP | Annual GDP growth rate | Sanya and Wolfe (2011) | +/− |
Inflation | Annual consumer price inflation | Sanya and Wolfe (2011) | +/− |
Variables | Ordinary Least Square (OLS) | Fixed Effects (FE) | Sys-GMM | Sys-GMM | Sys-GMM |
---|---|---|---|---|---|
Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
L.ROA | 0.386 *** | 0.068 ** | 0.223 *** | 0.262 *** | 0.385 *** |
(0.000) | (0.018) | (0.009) | (0.004) | (0.004) | |
FC | −0.053 *** | −0.030 *** | −0.052 *** | −0.043 *** | −0.047 ** |
(0.000) | (0.009) | (0.002) | (0.002) | (0.031) | |
CA | 0.014 *** | 0.029 *** | 0.031 *** | 0.021 ** | 0.019 ** |
(0.002) | (0.000) | (0.001) | (0.013) | (0.025) | |
NIEAA | −0.070 *** | −0.047 * | −0.102 ** | −0.147 *** | −0.119 ** |
(0.001) | (0.068) | (0.022) | (0.000) | (0.041) | |
LIQ | 0.014 ** | 0.028 *** | 0.015 | 0.009 | 0.013 |
(0.025) | (0.000) | (0.176) | (0.323) | (0.410) | |
IA | −0.001 | 0.000 | 0.001 | 0.001 | 0.002 |
(0.492) | (0.894) | (0.625) | (0.794) | (0.593) | |
LOA | 0.003 | 0.003 | 0.004 | 0.004 | 0.008 |
(0.603) | (0.589) | (0.536) | (0.462) | (0.350) | |
NPL | −0.020 *** | −0.028 *** | −0.035 *** | −0.031 *** | −0.025 ** |
(0.000) | (0.000) | (0.001) | (0.001) | (0.028) | |
NII | 0.001 | −0.001 | 0.023 *** | ||
(0.517) | (0.784) | (0.000) | |||
NIITA | 0.250 *** | ||||
(0.000) | |||||
NII1 | −0.243 *** | ||||
(0.001) | |||||
NII2 | 0.0498 *** | ||||
(0.006) | |||||
GFC | −2.250 | −27.412 * | 43.469 | −81.363 ** | −61.198 ** |
(0.892) | (0.074) | (0.297) | (0.013) | (0.033) | |
GDP | 0.000 | 0.000 | −0.000 | −0.000 | 0.000 |
(0.938) | (0.374) | (0.712) | (0.581) | (0.907) | |
Inflation | −0.045 *** | −0.031 *** | −0.032 | −0.027 | −0.053 ** |
(0.000) | (0.002) | (0.150) | (0.187) | (0.016) | |
Year Dummies | Yes | Yes | Yes | Yes | Yes |
Constant | 115.465 *** | 130.296 *** | 37.277 *** | 82.466 | 11.884 |
(0.000) | (0.000) | (0.000) | (0.000) | (0.770) | |
Diagnostic tests | |||||
AR1 | −4.63 *** | −4.24 *** | −4.23 *** | ||
(0.000) | (0.000) | (0.000) | |||
AR2 | 0.37 | 0.71 | 1.31 | ||
(0.713) | (0.479) | (0.192) | |||
Hansen Test | 33.62 | 35.68 | 45.62 | ||
(0.192) | (0.359) | (0.216) | |||
F Test | (34.34) *** | 53.65 *** | 6.11 *** | ||
(0.000) | (0.000) | (0.000) | |||
No of Instruments | 52 | 52 | 68 | ||
R-squared | 0.298 | 0.123 | |||
Observations | 1275 | 1275 | 1275 | 1285 | 1168 |
VARIABLES | OLS | FE | Sys-GMM | Sys-GMM | Sys-GMM |
---|---|---|---|---|---|
Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
L.SHROA | 0.414 *** | 0.107 *** | 0.358 *** | 0.337 ** | 0.415 ** |
(0.000) | (0.000) | (0.000) | (0.014) | (0.018) | |
FC | −0.026 *** | −0.010 | −0.028 *** | −0.033 *** | −0.035 ** |
(0.000) | (0.133) | (0.000) | (0.000) | (0.012) | |
CA | 0.007 ** | 0.015 *** | 0.011 *** | 0.004 | 0.004 |
(0.013) | (0.001) | (0.003) | (0.514) | (0.436) | |
NIEAA | −0.045 *** | −0.049 *** | −0.045 ** | −0.084 *** | −0.100 *** |
(0.001) | (0.003) | (0.020) | (0.000) | (0.008) | |
LIQ | 0.013 *** | 0.014 *** | 0.019 *** | 0.015 *** | 0.021 *** |
(0.000) | (0.004) | (0.000) | (0.001) | (0.003) | |
IA | 0.000 | 0.001 | 0.002 ** | 0.001 | 0.004 |
(0.890) | (0.536) | (0.022) | (0.342) | (0.110) | |
LOA | 0.000 | −0.002 | 0.000 | −0.002 | −0.004 |
(0.936) | (0.607) | (0.875) | (0.593) | (0.517) | |
NPL | −0.014 *** | −0.017 *** | −0.020 *** | −0.022 *** | −0.015 ** |
(0.000) | (0.000) | (0.000) | (0.003) | (0.042) | |
NII | 0.001 | 0.001 | 0.002 ** | ||
(0.239) | (0.307) | (0.041) | |||
NIITA | 0.151 *** | ||||
(0.000) | |||||
NII1 | −0.047 ** | ||||
(0.037) | |||||
NII2 | 0.047 *** | ||||
(0.001) | |||||
GFC | −7.300 | −9.964 * | −13.991 ** | −0.348 ** | −0.478 ** |
(0.234) | (0.066) | (0.014) | (0.035) | (0.046) | |
GDP | −0.000 | −0.000 | −0.000 | −0.000 | −0.000 |
(0.496) | (0.115) | (0.228) | (0.401) | (0.468) | |
Inflation | −0.014 *** | −0.015 *** | −0.012 ** | −0.018 | −0.019 |
(0.003) | (0.001) | (0.010) | (0.203) | (0.323) | |
Year Dummies | Yes | Yes | Yes | Yes | Yes |
Constant | 60.190 *** | 68.168 *** | 51.801 *** | 62.312 ** | −20.711 ** |
(0.000) | (0.000) | (0.000) | (0.020) | (0.015) | |
Diagnostic tests | |||||
AR1 | −4.30 *** | −3.95 *** | −3.97 *** | ||
(0.000) | (0.000) | (0.000) | |||
AR2 | 2.28 | 2.18 | 2.22 | ||
(0.322) | (0.430) | (0.326) | |||
Hansen Test | 31.88 | 32.36 | 28.35 | ||
(0.236) | (0.118) | (0.245) | |||
F Test | (26.93) *** | 12.01 *** | 4.49 *** | ||
(0.000) | (0.000) | (0.000) | |||
No of Instruments | 40 | 52 | 53 | ||
R-squared | 0.311 | 0.109 | |||
Observations | 1275 | 1275 | 1275 | 1285 | 1168 |
VARIABLES | OLS | FE | Sys-GMM | Sys-GMM | Sys-GMM |
---|---|---|---|---|---|
Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
L.ROE | 0.332 *** | 0.071 ** | 0.154 ** | 0.197 ** | 0.266 ** |
(0.000) | (0.020) | (0.017) | (0.043) | (0.011) | |
FC | −0.289 * | −0.110 | −0.465 * | −0.271 | −0.160 |
(0.069) | (0.542) | (0.082) | (0.112) | (0.551) | |
CA | 0.164 *** | 0.189 * | 0.157 | 0.040 | 0.159 |
(0.008) | (0.089) | (0.202) | (0.747) | (0.336) | |
NIEAA | −1.892 *** | −0.801 ** | −2.368 *** | −3.144 *** | −2.951 *** |
(0.000) | (0.045) | (0.000) | (0.000) | (0.001) | |
LIQ | 0.167 * | 0.187 | 0.373 *** | 0.215 ** | 0.133 |
(0.057) | (0.105) | (0.001) | (0.028) | (0.447) | |
IA | 0.034 | 0.012 | 0.030 | 0.041 | 0.104 ** |
(0.271) | (0.749) | (0.564) | (0.250) | (0.034) | |
LOA | 0.045 | 0.019 | 0.163 | 0.103 | 0.039 |
(0.615) | (0.838) | (0.150) | (0.237) | (0.708) | |
NPL | −0.544 *** | −0.554 *** | −0.768 *** | −0.531 *** | −0.618 *** |
(0.000) | (0.000) | (0.000) | (0.000) | (0.006) | |
NII | 0.036 | 0.027 | 0.323 *** | ||
(0.143) | (0.337) | (0.000) | |||
NIITA | 3.000 *** | ||||
(0.000) | |||||
NII1 | −0.724 ** | ||||
(0.013) | |||||
NII2 | 0.378 * | ||||
(0.075) | |||||
GFC | −730.370 *** | −1046.405 *** | −0.925 ** | −0.237 ** | −0.537 ** |
(0.002) | (0.000) | (0.027) | (0.043) | (0.021) | |
GDP | −0.000 | 0.000 | 0.000 | −0.000 | 0.000 |
(0.570) | (0.504) | (0.100) | (0.772) | (0.689) | |
Inflation | −0.057 | −0.098 | 0.042 | 0.168 | 0.160 |
(0.701) | (0.522) | (0.921) | (0.411) | (0.507) | |
Year Dummies | Yes | Yes | Yes | Yes | Yes |
Constant | 1775.583 *** | 2082.598 *** | 2417.420 ** | 1656.969 *** | 1563.396 *** |
(0.000) | (0.000) | (0.013) | (0.000) | (0.000) | |
Diagnostic tests | |||||
AR1 | −3.92 *** | −5.37 *** | −4.69 *** | ||
(0.000) | (0.000) | (0.000) | |||
AR2 | −0.08 | 0.87 | 0.23 | ||
(0.939) | (0.386) | (0.816) | |||
Hansen Test | 10.70 | 33.14 | 30.08 | ||
(0.555) | (0.121) | (0.182) | |||
F Test | (36.46) *** | 239.04 *** | 128.49 *** | ||
(0.000) | (0.000) | (0.000) | |||
No of Instruments | 40 | 52 | 53 | ||
R-squared | 0.309 | 0.117 | |||
Observations | 1272 | 1272 | 1272 | 1282 | 1165 |
VARIABLES | OLS | FE | Sys-GMM | Sys-GMM | Sys-GMM |
---|---|---|---|---|---|
Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
L. Z-Score | 0.257 *** | 0.073 *** | 0.086 * | 0.036 | −0.021 |
(0.000) | (0.001) | (0.084) | (0.665) | (0.863) | |
FC | −0.059 ** | −0.005 | 0.012 | −0.063 ** | −0.057 |
(0.012) | (0.837) | (0.868) | (0.036) | (0.118) | |
CA | 0.367 *** | 0.287 *** | 0.545 *** | 0.487 *** | 0.507 *** |
(0.000) | (0.000) | (0.000) | (0.000) | (0.000) | |
NIEAA | 0.008 | 0.032 | 0.013 | −0.123 ** | −0.102 |
(0.863) | (0.586) | (0.877) | (0.035) | (0.211) | |
LIQ | 0.012 | 0.001 | 0.037 | 0.006 | 0.026 |
(0.348) | (0.932) | (0.172) | (0.706) | (0.153) | |
IA | 0.003 | 0.003 | 0.005 | 0.004 | 0.012 |
(0.555) | (0.567) | (0.634) | (0.438) | (0.111) | |
LOA | −0.001 | −0.002 | −0.008 | −0.011 | −0.019 |
(0.910) | (0.906) | (0.710) | (0.456) | (0.299) | |
NPL | −0.024 *** | −0.044 *** | −0.038 | −0.036 ** | −0.029 * |
(0.003) | (0.000) | (0.178) | (0.022) | (0.073) | |
NII | 0.005 | −0.000 | 0.032 ** | ||
(0.149) | (0.993) | (0.032) | |||
NIITA_ | 0.359 *** | ||||
(0.000) | |||||
NII 1 | −0.011 ** | ||||
(0.018) | |||||
NII 2 | 0.103 ** | ||||
(0.017) | |||||
GFC | 51.651 | 39.508 | −270.868 | −170.188 *** | 101.322 |
(0.145) | (0.261) | (0.254) | (0.000) | (0.225) | |
GDP | −0.000 | −0.000 | −0.000 | −0.000 | −0.000 |
(0.560) | (0.610) | (0.450) | (0.185) | (0.409) | |
Inflation | −0.028 | 0.017 | −0.007 | 0.001 | −0.023 |
(0.205) | (0.460) | (0.957) | (0.971) | (0.506) | |
Year Dummies | Yes | Yes | Yes | Yes | Yes |
Constant | 105.469 ** | 227.821 *** | −222.912 | −379.127 | −481.791 |
(0.011) | (0.000) | (0.302) | (0.456) | (0.456) | |
Diagnostic tests | |||||
AR1 | −3.92 *** | −5.37 *** | −4.69 *** | ||
(0.000) | (0.000) | (0.000) | |||
AR2 | −0.08 | 0.87 | 0.23 | ||
(0.939) | (0.386) | (0.816) | |||
Hansen Test | 10.70 | 33.14 | 30.08 | ||
(0.555) | (0.121) | (0.182) | |||
F Test | (36.46) *** | 239.04 *** | 128.49 *** | ||
(0.000) | (0.000) | (0.000) | |||
No of Instruments | 40 | 52 | 53 | ||
Observations | 1275 | 1275 | 1275 | 1285 | 1168 |
R-squared | 0.719 | 0.603 |
VARIABLES | OLS | FE | Sys-GMM | Sys-GMM | Sys-GMM |
---|---|---|---|---|---|
Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
L.ROA | 0.412 *** | −0.047 | 0.246 * | 0.221 ** | 0.203 * |
(0.000) | (0.247) | (0.093) | (0.016) | (0.068) | |
FC | −0.202 *** | −0.287 *** | −0.181 *** | −0.158 *** | −0.206 *** |
(0.000) | (0.000) | (0.000) | (0.000) | (0.000) | |
CA | 0.022 *** | 0.014 | 0.045 ** | 0.030 * | 0.031 * |
(0.004) | (0.414) | (0.044) | (0.082) | (0.082) | |
NIEAA | −0.363 *** | −0.448 *** | −0.332 *** | −0.395 *** | −0.296 ** |
(0.000) | (0.000) | (0.001) | (0.000) | (0.012) | |
LIQ | −0.003 | 0.019 | 0.009 | 0.009 | −0.012 |
(0.723) | (0.185) | (0.586) | (0.516) | (0.555) | |
IA | −0.008 * | 0.003 | 0.004 | 0.000 | 0.001 |
(0.098) | (0.620) | (0.587) | (0.941) | (0.916) | |
LOA | 0.189 *** | −0.258 | 0.208 *** | 0.167 ** | 0.307 *** |
(0.000) | (0.162) | (0.010) | (0.022) | (0.005) | |
NPL | −0.036 *** | −0.058 *** | −0.059 *** | −0.049 *** | −0.063 *** |
(0.000) | (0.000) | (0.004) | (0.004) | (0.000) | |
NII | 0.003 | 0.004 | 0.029 *** | ||
(0.419) | (0.386) | (0.000) | |||
NIITA | 0.408 *** | ||||
(0.000) | |||||
NII1 | −0.018 * | ||||
(0.079) | |||||
NII2 | 0.116 *** | ||||
(0.003) | |||||
GFC | 0.021 | 0.317 | −0.095 | −0.196 | −0.185 |
(0.950) | (0.424) | (0.531) | (0.167) | (0.461) | |
GDP | 0.024 | 0.027 | −0.028 | −0.018 | −0.002 |
(0.419) | (0.395) | (0.368) | (0.509) | (0.940) | |
Inflation | −0.081 *** | −0.029 | −0.011 | −0.017 | −0.013 |
(0.000) | (0.159) | (0.538) | (0.289) | (0.651) | |
Year Dummies | Yes | Yes | Yes | Yes | Yes |
Constant | 1.282 ** | 7.458 *** | 0.615 | 0.250 | −1.475 |
(0.034) | (0.002) | (0.504) | (0.737) | (0.247) | |
Diagnostic tests | |||||
AR1 | −2.08 *** | −2.09 ** | −2.65 *** | ||
(0.003) | (0.037) | (0.008) | |||
AR2 | 1.10 | 0.14 | 1.21 | ||
(0.269) | (0.253) | (0.226) | |||
Hansen Test | 28.05 | 28.89 | 46.85 | ||
(0.408) | (0.366) | (0.280) | |||
F Test | (19.13) *** | 33.71 *** | 11.60 *** | ||
(0.000) | (0.000) | (0.000) | |||
No of Instruments | 40 | 40 | 56 | ||
R-squared | 0.480 | 0.322 | |||
Observations | 618 | 618 | 618 | 618 | 540 |
VARIABLES | OLS | FE | Sys-GMM | Sys-GMM | Sys-GMM |
---|---|---|---|---|---|
Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
L.SHROA | 0.431 *** | −0.006 ** | 0.317 *** | 0.237 * | 0.140 ** |
(0.000) | (0.036) | (0.000) | (0.065) | (0.030) | |
FC | −0.102 *** | −0.128 *** | −0.091 *** | −0.093 *** | −0.107 *** |
(0.000) | (0.000) | (0.000) | (0.000) | (0.000) | |
CA | 0.009 * | 0.015 | 0.018 *** | 0.021 ** | 0.024 * |
(0.063) | (0.138) | (0.001) | (0.045) | (0.083) | |
NIEAA | −0.226 *** | −0.210 *** | −0.199 *** | −0.250 *** | −0.206 *** |
(0.000) | (0.000) | (0.000) | (0.000) | (0.003) | |
LIQ | 0.002 | 0.023 *** | −0.001 | 0.002 | −0.006 |
(0.696) | (0.008) | (0.861) | (0.792) | (0.635) | |
IA | −0.006 ** | 0.007 * | −0.005 ** | −0.000 | −0.001 |
(0.038) | (0.070) | (0.016) | (0.946) | (0.877) | |
LOA | 0.115 *** | 0.033 | 0.117 *** | 0.103 ** | 0.186 *** |
(0.000) | (0.613) | (0.000) | (0.017) | (0.005) | |
NPL | −0.022 *** | −0.035 *** | −0.025 *** | −0.029 *** | −0.048 *** |
(0.000) | (0.000) | (0.000) | (0.005) | (0.001) | |
NII | 0.001 | 0.002 | 0.005 *** | ||
(0.807) | (0.605) | (0.007) | |||
NIITA | 0.254 *** | ||||
(0.000) | |||||
NII1 | −0.004 * | ||||
(0.066) | |||||
NII2 | 0.076 *** | ||||
(0.002) | |||||
GFC | −0.031 | −0.020 | −0.065 | −0.064 | −0.104 |
(0.770) | (0.828) | (0.242) | (0.443) | (0.397) | |
GDP | 0.007 | 0.006 | −0.007 | −0.015 | −0.025 |
(0.661) | (0.751) | (0.477) | (0.374) | (0.319) | |
Inflation | −0.021 ** | −0.000 | −0.017 *** | −0.009 | −0.001 |
(0.017) | (0.958) | (0.003) | (0.349) | (0.950) | |
Year Dummies | Yes | Yes | Yes | Yes | Yes |
Constant | 0.534 | 1.320 | 0.165 | 0.140 | −0.991 |
(0.108) | (0.125) | (0.549) | (0.764) | (0.230) | |
Diagnostic tests | |||||
AR1 | −2.74 *** | −2.48 *** | −2.98 *** | ||
(0.006) | (0.013) | (0.003) | |||
AR2 | 1.52 | 1.43 | 0.95 | ||
(0.128) | (0.153) | (0.342) | |||
Hansen Test | 33.45 | 29.16 | 24.62 | ||
(0.183) | (0.353) | (0.596) | |||
F Test | (70.10) *** | 36.15 *** | 13.62 *** | ||
(0.000) | (0.000) | (0.000) | |||
No of Instruments | 40 | 40 | 41 | ||
R-squared | 0.443 | 0.270 | |||
Observations | 618 | 618 | 618 | 627 | 540 |
© 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Share and Cite
Nisar, S.; Peng, K.; Wang, S.; Ashraf, B.N. The Impact of Revenue Diversification on Bank Profitability and Stability: Empirical Evidence from South Asian Countries. Int. J. Financial Stud. 2018, 6, 40. https://doi.org/10.3390/ijfs6020040
Nisar S, Peng K, Wang S, Ashraf BN. The Impact of Revenue Diversification on Bank Profitability and Stability: Empirical Evidence from South Asian Countries. International Journal of Financial Studies. 2018; 6(2):40. https://doi.org/10.3390/ijfs6020040
Chicago/Turabian StyleNisar, Shoaib, Ke Peng, Susheng Wang, and Badar Nadeem Ashraf. 2018. "The Impact of Revenue Diversification on Bank Profitability and Stability: Empirical Evidence from South Asian Countries" International Journal of Financial Studies 6, no. 2: 40. https://doi.org/10.3390/ijfs6020040
APA StyleNisar, S., Peng, K., Wang, S., & Ashraf, B. N. (2018). The Impact of Revenue Diversification on Bank Profitability and Stability: Empirical Evidence from South Asian Countries. International Journal of Financial Studies, 6(2), 40. https://doi.org/10.3390/ijfs6020040