The threshold effects of income diversification on bank stability: an efficiency perspective based on a dynamic network slacks-based measure model

Lahouel, Béchir Ben; Taleb, Lotfi; Kočišová, Kristína; Zaied, Younes Ben

doi:10.1007/s10479-021-04503-4

Cited by 12 publications

(3 citation statements)

References 109 publications

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“…There are mainly broad and narrow measures of OBS, with the broad measure of OBS measured by banks' non-interest income [ 37 , 38 ], or degree of income diversity [ 39 , 40 ]. For OBS in a broad sense, some studies concluded that OBS would harm bank efficiency.…”

Section: Literature Reviewmentioning

confidence: 99%

Off-balance sheet business development and bank efficiency: A financial innovation matching perspective

Cao

Zhu

Wen-mei

et al. 2023

Heliyon

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Section: Literature Reviewmentioning

confidence: 99%

Off-balance sheet business development and bank efficiency: A financial innovation matching perspective

Cao

Zhu

Wen-mei

et al. 2023

Heliyon

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“…It is a backward‐looking measure of credit quality, the worsening of which can hinder lending activity and encourage a bank to adopt a diversification strategy. One strand of literature has highlighted the “dark sides” of adopting a diversification strategy, as engaging in new types of business may lead to higher risk‐taking due to a lack of expertise (BenLahouel et al, 2022; Louzis et al, 2012; Stiroh & Rumble, 2006). However, another strand of the literature has found no significant relationship between nonperforming loans and bank diversification (Khan et al, 2020; Naili & Lahrichi, 2022).…”

Section: Data and Equationmentioning

confidence: 99%

Do spatial dependence and market power matter in the diversification of cooperative banks?

2022

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This study examines the determinants of cooperative banks' diversification proclivity, with consideration of the spatial dependence effect. The empirical analysis demonstrates that Italian cooperative banks operate as a network with significant spillover effects that should not be ignored. Indeed, local banks compete in the same market segment, and any shift in their diversification strategy has a cascading effect on neighbouring cooperative banks as a result of customer migration. Finally, we observe that an increase in bank market power results in a decline in local bank lending activity.

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“…First, no study has, to our knowledge, examined the non-linear relationship between bank diversification and bank profitability for the MENA region. The only study that investigates the threshold effect of bank diversification is the work of Ben Lahouel et al (2022). However, this study focuses on the nonlinear relationship between bank diversification and bank stability.…”

Section: Introductionmentioning

confidence: 99%

Searching for a Threshold effect in the Diversification-profitability Relationship. Evidence from the MENA Banks

Khemiri

2023

IJEFI

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This paper investigates the non-linear relationship between bank diversification and bank profitability in the MENA region. More specifically it checks whether there exists a threshold effect in the diversification-profitability relationship. To achieve this goal, we used a panel of 83 retail MENA banks during the period 2005-2020 and we performed the Panel Smooth Transition Regression (PSTR) model as empirical approach. The results confirm the existence of a threshold effect in the non-interest income and bank profitability relationship. To get benefit from bank diversification, the ratio of non-interest income in the MENA region should exceed 22% when profitability is ROA and 25.41% for ROE. Below these thresholds, bank diversification significantly decreases the level of bank profitability. The findings of this research have substantial implications for both policymakers and bankers. The MENA banks should be engaged in more diversified bank activities in order to enhance their overall revenues.

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The threshold effects of income diversification on bank stability: an efficiency perspective based on a dynamic network slacks-based measure model

Cited by 12 publications

References 109 publications

Off-balance sheet business development and bank efficiency: A financial innovation matching perspective

Off-balance sheet business development and bank efficiency: A financial innovation matching perspective

Do spatial dependence and market power matter in the diversification of cooperative banks?

Searching for a Threshold effect in the Diversification-profitability Relationship. Evidence from the MENA Banks

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