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Asset diversification and bank performance: Evidence from three Asian countries with a dual banking system

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  • Chen, Naiwei
  • Liang, Hsin-Yu
  • Yu, Min-Teh

Abstract

This study examines the effect of asset diversification on bank performance in three Asian countries with a dual banking system from 2006 to 2012. We find that diversification generally has a negative effect on the performance of conventional banks, but a minimal effect on that of Islamic banks. Considering bank size, diversification positively affects the profitability of large Islamic and conventional banks, and such a positive effect is more pronounced among Islamic banks.

Suggested Citation

  • Chen, Naiwei & Liang, Hsin-Yu & Yu, Min-Teh, 2018. "Asset diversification and bank performance: Evidence from three Asian countries with a dual banking system," Pacific-Basin Finance Journal, Elsevier, vol. 52(C), pages 40-53.
    • Handle: RePEc:eee:pacfin:v:52:y:2018:i:c:p:40-53
    DOI: 10.1016/j.pacfin.2018.02.007
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