IDEAS home Printed from https://ideas.repec.org/a/aac/ijirss/v8y2025i3p2385-2396id6994.html
   My bibliography  Save this article

Does income diversification reduce banks’ risk-taking? The difference between large and small banking groups: Evidence from an emerging country

Author

Listed:
  • Thanh Nga Thi Tran

Abstract

This paper aims to examine whether income diversification enhances the bank’s risk-taking in emerging markets. It analyzes how this relationship varies between different bank sizes. This study utilizes the S-GMM (system Generalized Method of Moments) estimation [1] to conduct panel data regression. Additionally, it follows the framework outlined by Laeven [2] and Wang et al. [3] to categorize banks into large and small based on their average total assets. Large banks are characterized as institutions with total assets exceeding the median value of assets within the banking sector. In contrast, small banks are identified as those with total assets that fall below this median threshold. The empirical results reveal that income diversification negatively affects banks’ risk-taking in small banks. Conversely, for large banks, the study shows that income diversification has a positive impact on banks’ risk-taking. This study marks the inaugural effort to explore the varying impacts of income diversification on risk-taking behavior among different banking groups in emerging markets. The results may offer valuable insights for researchers, policymakers, and bank managers, enabling them to develop targeted diversification strategies for each banking group to enhance the overall safety of the banking sector in today’s competitive environment.

Suggested Citation

  • Thanh Nga Thi Tran, 2025. "Does income diversification reduce banks’ risk-taking? The difference between large and small banking groups: Evidence from an emerging country," International Journal of Innovative Research and Scientific Studies, Innovative Research Publishing, vol. 8(3), pages 2385-2396.
  • Handle: RePEc:aac:ijirss:v:8:y:2025:i:3:p:2385-2396:id:6994
    as

    Download full text from publisher

    File URL: https://ijirss.com/index.php/ijirss/article/view/6994/1435
    Download Restriction: no
    ---><---

    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:aac:ijirss:v:8:y:2025:i:3:p:2385-2396:id:6994. 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: Natalie Jean (email available below). General contact details of provider: https://ijirss.com/index.php/ijirss/ .

    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.