IDEAS home Printed from https://ideas.repec.org/a/taf/raaexx/v27y2020i4p389-405.html
   My bibliography  Save this article

Bank diversification, performance, and corporate governance: evidence from China

Author

Listed:
  • Hsin-Yu Liang
  • Liang-wei Kuo
  • Kam C. Chan
  • Sheng-Hung Chen

Abstract

This paper examines the merit of bank diversification using a sample of listed Chinese national banks during 2003–2012. We find that income source diversity positively affects profitability but negatively affects operating efficiency and market valuation. By exploiting an exogenous change in the regulatory attitude toward diversification in 2008, we find that the positive diversification-profitability relation before 2008 changes to negative afterwards; meanwhile, the diversification discount turns to premium. We conjecture that the source of discount captures changes in the diversification-induced agency costs. Finally, we find that governance matters as it enhances the positive diversification-profitability relation and mitigates diversification discount.

Suggested Citation

  • Hsin-Yu Liang & Liang-wei Kuo & Kam C. Chan & Sheng-Hung Chen, 2020. "Bank diversification, performance, and corporate governance: evidence from China," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 27(4), pages 389-405, July.
    • Handle: RePEc:taf:raaexx:v:27:y:2020:i:4:p:389-405
    DOI: 10.1080/16081625.2018.1452618
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/16081625.2018.1452618
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/16081625.2018.1452618?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Maghyereh, Aktham Issa & Yamani, Ehab, 2022. "Does bank income diversification affect systemic risk: New evidence from dual banking systems," Finance Research Letters, Elsevier, vol. 47(PB).
    2. Haykel Zouaoui & Faten Zoghlami, 2023. "What do we know about the impact of income diversification on bank performance? A systematic literature review," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(3), pages 286-309, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:raaexx:v:27:y:2020:i:4:p:389-405. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/raae20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.