INCOME DIVERSIFICATION AND FINANCIAL STABILITY OF BANKS IN NIGERIA
Keywords:
Income Diversification, Financial Stability, Banks, Nigeria
Abstract
Income diversification is a concept that is gaining wider acceptability mostly by banks in the developing countries. This paper studies the possible application of this concept to banks in Nigeria and examines whether it is potent in ensuring financial stability for the system. The study uses secondary data from 1960 to 2015 to conduct a time series with the aid of error correction model and observes positive and significant relationship between income diversification and financial stability. It postulates that income diversification is good for the system.
Key Words – Income Diversification; Financial Stability; Banks; Nigeria.
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References
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Podder B. (2012). Determinants of Profitability of Private Commercial Banks In Bangladesh: An Empirical Study. A Thesis for a Professional Master in Banking and Finance, Asian Institute of Technology, Thailand
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Sufian, F., & R. R. Chong. (2008). Determinants of Bank Profitability in Developing Economy: Empirical Evidence from the Philippines. Asian Academy of Management Journal of Accounting and Finance, Vol.4, No.1, pp. 91–112.
Albertazzi, U. & L. Gambacorta, (2009). Bank Profitability and the Business Cycle. Journal of Financial Stability Vol. 5, pp. 393-409
Aremu, M. A.; Ekpo, I. C. & A. M. Mustapha (2013). Determinants of Banks’ Profitability In A Developing Economy: Evidence from Nigerian Banking Industry. Interdisciplinary Journal of Contemporary Research in Business; Vol. 4, No. 9, pp. 155 – 181.
Athanasoglou, P.P., Sophocles, N.B. & D. D. Matthaios, (2005). Bank-Specific, Industry-Specific and Macroeconomic Determinants of Bank Profitability. Working Paper, Bank of Greece. Vol. 1, No. 1.
Baele, L. De Jonghe, O. & R. V. Vennet, (2007), Does the Stock Market Value Bank Diversification? Journal of Banking & Finance. No.31: pp. 1999-2023
Busch, R., & T. Kick, (2009). Income Diversification in the German Banking Industry. Discussion Paper Series 2: Banking and Financial Studies, No 09, Deutsche Bundesbank.
Chen, K. & C. Pan, (2012). An Empirical Study of Credit Risk Efficiency of Banking Industry in Taiwan, Web Journal of Chinese Management Review, Vol.15, No1, pp. 1-16.
Chiorazzo, V., Milani, C. & F. Salvini, (2008). Income Diversification and Bank Performance: Evidence from Italian Banks. Journal of Financial Services Research. No. 33, pp. 181-203.
Coyle, B. (2000). Framework for Credit Risk Management, Chartered Institute of Bankers, United Kingdom.
Damankah B. S; Anku-Tsede O., Abubakar M. & N. Eliasu (2015), Income Diversification and Financial Stability of Banks in Ghana, International. Journal of Business and Social Science Vol. 6, No. 6; Pp. 177 – 184.
Davis, E. (2001), A Typology of Financial Instability, Oesterreichische National Bank (Central Bank of Austria) Financial Stability Report No. 2, pp. 92‐110.
Demirguc-Kunt, A. & H. Huzinga. (1999). Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence, The World Bank Economic Review, Vol. 13, No. 2, pp. 379-40.
DeYoung R. & T. Rice (2004). Noninterest Income and Financial Performance at U.S. Commercial Banks, The Financial Review. No. 39: pp. 101-127.
DeYoung R. & K. P. Ronald (2001). Product Mix and Earnings Volatility at Commercial Banks: Evidence from a Degree of Total Leverage Model. Journal of Financial Intermediation. Vol. 10: pp. 54-84.
Elsas R., Hackethal A. & M. Holzhauser. (2010). The Anatomy of Bank Diversification, Journal of Banking & Finance, Vol. 34, pp. 1274-1287.
Gieseche, K. (2004). Credit Risk Modeling and Valuation: An Introduction, Credit Risk: Models and Management, Vol.2, Cornell University, London.
Hayden, E., Porath, D., & N. Westernhagen, (2005). Does Diversification Improve The Performance of German Banks? Evidence from Individual Bank Loan Portfolios. Working Paper, Osterreichische National Bank and Deutsche Bundesbank.
Hussain, H. & G. A. Bhatti, (2010). Evidence on Structure Conduct Performance Hypothesis in Pakistani Commercial Banks. International Journal of Business and Management. 5(9): 174-187
Kamp, A., Pfingsten, A., & D. Porath, (2005). Do Banks Diversify Loan Portfolios? A Tentative Answer Based on Individual Bank Loan Portfolios. Working Paper No 3, Deutsche Bundesbank, Frankfurt am Main.
Kargi, H.S. (2011). Credit Risk and the Performance of Nigerian Banks, Ahmadu Bello University, Zaria
Mercieca, S. Schaeck K. & S. Wolfe (2007), Small European Banks: Benefits from Diversification? Journal of Banking and Finance. Vol 31: pp. 1975-1998.
Oluitan R.O (2012a) Bank Credit and Economic Growth: Evidence from Nigeria. International Business and Management Journal, Vol.5, No. 2, pp. 99 - 107
Oluitan R.O (2012b) “Financial Development and Economic Growth in Africa: Lessons and Prospects” Business and Economic Research, Vol.2, No. 2, pp. 54-64
Ongore, V.O & G. M. Kusa, (2013), Determinants of Financial Performance of Commercial Banks in Kenya, International Journal of Economics and Financial Issues, 3(1): 237- 252
O'Sullivan, A. & S. Sheffrin, (2003). Economics: Principles in Action. New Jersey: Pearson Prentice Hall.
Padoa‐Schioppa, T., (2002), “Central Banks and Financial Stability: Exploring a Land in Between”, Paper Presented at the Second ECB Central Banking Conference, Frankfurt am Main, 24‐25 October.
Podder B. (2012). Determinants of Profitability of Private Commercial Banks In Bangladesh: An Empirical Study. A Thesis for a Professional Master in Banking and Finance, Asian Institute of Technology, Thailand
Sibel Y. T, & Y. Ihsan (2012), Diversification in Banking and its Effect on Banks’ Performance: Evidence from Turkey Banks. American International Journal of Contemporary Research, Vol. 2 No. 12 Pp. 111 – 119.
Siddiqui M. & A. Shoaib, (2011). Measuring Performance through Capital Structure: Evidence from Banking Sector of Pakistan, African Journal of Business Management, Vol. 5, No. 5, pp. 1871-1879.
Stroh, and J. Patrick. (2012) .Enterprise Risk Management at United Health Group,‖ Strategic Finance, pp. 27-35.
Sufian, F., & R. R. Chong. (2008). Determinants of Bank Profitability in Developing Economy: Empirical Evidence from the Philippines. Asian Academy of Management Journal of Accounting and Finance, Vol.4, No.1, pp. 91–112.
Published
2018-05-31
How to Cite
Oluitan, R., & Balogun, M. F. (2018). INCOME DIVERSIFICATION AND FINANCIAL STABILITY OF BANKS IN NIGERIA. IJRDO - Journal of Business Management, 4(5), 01-08. https://doi.org/10.53555/bm.v4i5.1942
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Articles
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