Jul 2026· Asian Journal of Empirical Research· 0 citations· 30 references
Abstract
In emerging economies, especially in the West African Monetary Zone (WAMZ), where banks predominate in financial intermediation despite macroeconomic uncertainty, the financial sustainability of banks remains a major policy concern. This study adds two important new findings to the existing literature by examining the impact of income diversification on banks' long-term growth. First, this study employs the sustainable growth rate as the primary performance metric, capturing banks' capacity to expand internally without external funding, in contrast to most earlier studies that focus on short-term profitability or stability metrics. Second, the study provides new evidence on how market structure influences the efficacy of income diversification strategies by explicitly modeling bank competition as an interaction factor in the relationship between income diversification and sustainable growth rate. Using an unbalanced panel of 24 listed banks from Ghana and Nigeria over the period 2015-2024, and a dynamic two-step system generalized method of moments estimator to address endogeneity and persistence, the results show that income diversification greatly improves banks' sustainable growth. More significantly, there is a positive and statistically significant interaction between income diversification and bank competition, suggesting that higher pricing power and more intense competition increase the advantages of income diversification. These results extend the banking literature by demonstrating that the impact of income diversification on long-term growth is conditional on bank market structure. The study presents important policy implications for regulators in the WAMZ, emphasizing the need to promote prudent income diversification strategies alongside a competitive banking environment to enhance financial sustainability.
This study examines how non-interest income diversification affects bank performance and risk in selected emerging Asian economies. Drawing on panel data from 44 banks across China (36) and Thailand (8) over 2022–2025, the analysis employs fixed-effects regressions, mediation analysis, and subsample testing to unpack the performance implications of revenue diversification. The non-interest income ratio (NII) serves as the proxy for income diversification, capturing the strategic shift away from traditional net-interest margins toward fee-based and digitally facilitated activities in markets where mobile payment ecosystems and virtual banking frameworks have reshaped competitive dynamics. Results indicate that NII exerts a statistically significant positive effect on bank profitability (ROA and ROE), with no corresponding increase in risk exposure as measured by Z-score. The relationship is markedly stronger among large banks, consistent with scale advantages in technology infrastructure, network effects, and regulatory compliance cost amortization. Cost efficiency does not mediate the NII-performance nexus, suggesting that revenue-side mechanisms dominate in this context. Cross-country exploratory patterns reveal stable but modest effects in China’s mature diversification ecosystem against larger but statistically imprecise coefficients in Thailand’s early-stage transition. These findings offer a qualified complement to the Western-centric complexity-risk narrative and highlight institutional boundary conditions governing bank diversification outcomes in emerging markets.
Qian Fang, N. Rojniruttikul· Journal of Risk and Financia...· 0 citations
The banking system, as one of the main pillars of the financial system, plays a key role in mobilizing resources, optimally allocating them, and directing capital toward productive activities. Given the environmental changes and increasing competition in financial markets, it is necessary to pay attention to factors such as efficiency, creating additional value, and expanding income diversification to improve bank performance. This article examines the simultaneous relationships between income diversification, efficiency, and Excess value of banks listed on the Tehran Stock Exchange. The statistical population includes banks listed on the Tehran Stock Exchange during the years 2011-2023, and the data were collected based on annual financial statements. The simultaneous equations model and econometric methods were used to test the hypotheses and analyze the relationships. The research findings showed that both efficiency and Excess value have a positive and significant effect on the diversification strategy of banks. Also, the results indicate that the diversification strategy and Excess value can affect the efficiency of banks. Finally, diversification and efficiency strategies also showed a significant relationship with the Excess value of banks. In addition, return on equity was the only control variable that had a positive and significant effect on all three main variables. These results indicate that paying attention to the dynamic cycle between these components can help bank managers and policymakers in formulating financial strategies, supporting economic growth, and improving the performance of banks listed on the Tehran Stock Exchange.
G. Haji, Zinat Ghorbani, M. Fotros et al.· Economics and Financial Poli...· 0 citations
This study investigates the impact of institutional quality, macroeconomic indicators and firm-specific factors on the capital structure and financing decisions of commercial banks in Ethiopia. Utilising a panel data regression approach, the study analyses a sample of 16 commercial banks out of a total population of 30 over the period 2015–2025. Data were sourced from bank financial statements, the Ministry of Finance and the World Bank. Employing a random-effects model, the empirical findings reveal that among the institutional quality variables, political stability exerts a positive and statistically significant influence on financing decisions, whereas regulatory quality has a significant negative effect. Macroeconomic factors were found to have no statistically significant impact. Regarding firm-specific determinants, asset size significantly increases financing leverage, while fixed capital intensity and credit risk demonstrate significant negative relationships. Consequently, policy recommendations suggest that the government enhance regulatory frameworks to foster healthy competition and improve financial intermediation, thereby encouraging banks to maintain prudent capital ratios and mitigate excessive risk-taking.
Sofoniyas Mekonnen Fekadu, D. Lakew, L. Gobena· International Journal of Fin...· 0 citations
The financial performance of commercial banks remains a subject of considerable interest in both academic and policy circles, particularly in emerging markets where the banking sector constitutes a critical pillar of economic intermediation. This study examines the determinants of financial performance among Tier II and Tier III commercial banks in Kenya, using data extracted from audited financial statements for the fiscal year ending December 2025. The study employs Return on Assets (ROA) as the dependent variable and considers five bank specific explanatory variables: the Non-Performing Loan (NPL) ratio, Loan to Deposit ratio, Capital Adequacy ratio, Net Interest Income to Assets ratio and Operating Income to Assets ratio. Using Ordinary Least Squares (OLS) regression analysis on a sample of 28 banks, the study finds that the model explains approximately 70.83% of the variation in ROA (R² = 0.7083; Adj. R² = 0.6419), which is statistically significant at the 1% level (F (5, 22) = 10.68; p < .0001). The NPL ratio exerts a significant negative effect on performance (β = −0.0408; p = 0.006), while capital adequacy (β = 0.0913; p = 0.026) and operating income efficiency (β = 0.4214; p = 0.012) are significant positive drivers of ROA. The Loan to Deposit ratio and Net Interest Income ratio do not yield statistically significant effects. Diagnostic tests confirm the absence of multicollinearity (Mean VIF = 1.74), homoskedasticity (Breusch-Pagan p = 0.3153) and correct model specification (Ramsey RESET p = 0.8894). The findings suggest that beyond bank size, credit quality management, capital strength and income diversification are the primary levers of financial performance in Kenya's mid-tier banking segment.
Keywords: Financial performance, ROA, Tier II and III banks, NPL ratio, capital adequacy, OLS regression.
Yegon Kiprotich Festus, Charles Githira· African Development Finance...· 0 citations
This study investigates the determinants of credit growth in Western Balkan countries over the period 2011–2023, assessing whether lending dynamics are driven by macroeconomic fundamentals or financial sector conditions. The analysis focuses on key variables, including GDP growth, foreign direct investment (FDI), inflation, and lending interest rates. Using a balanced panel dataset, the study employs pooled Ordinary Least Squares (OLS), fixed and random effects models, and a two-way fixed effects specification with Driscoll–Kraay standard errors to address cross-sectional dependence and unobserved heterogeneity. The empirical results show that lending interest rates exert a statistically significant negative effect on credit growth, indicating that financial conditions play a central role in constraining lending activity. In contrast, GDP growth and inflation are not found to be significant determinants, challenging conventional macro-financial expectations. FDI becomes significant only when introduced in a lagged specification, suggesting a delayed transmission mechanism through which external capital inflows influence credit expansion. The study contributes to the literature by providing comparative multi-country evidence from structurally constrained and bank-dominated financial systems. The findings suggest that credit growth is driven less by traditional macroeconomic factors and more by financial sector conditions and institutional characteristics. These results have important policy implications, highlighting the need to strengthen financial intermediation efficiency and credit transmission mechanisms rather than relying solely on macroeconomic expansion to stimulate lending.
Erleta Halimi, Katalin Czakó, Arben Sahiti et al.· Emerging Science Journal· 0 citations
This paper aims to assess the impact of technological investment on the valuation and profitability of Indian banks. Furthermore, this study analyses the moderating effect of shareholder activism (SHA) on the association of Fintech, valuation and profitability.
The research involves a balanced static panel data comprising of 23 commercial Indian banks over a span of 15 years between the years 2010–2024.
The outcomes show that there is a positive association between the technological investment and valuation as well as profitability. The moderating influence of SHA has inconsistent and mixed results. This demonstrates that the internal strategies of the Indian banks are major motivation behind technology investment decisions, as opposed to the shareholders. These results would correlate to the resource-based view (RBV) theory, which highlights that specific abilities by investing in technologies and internal strategy are strategic resources to enhance profitability and valuation.
The study sample will be restricted to the Indian commercial banks and will not be extended to other financial institutions.
The study also provides practical implications that are valuable and can be used in relation to digital transformation, SHA and the performance of banking industry in India.
The study contributes to the existing body of research and provides a new contribution by assessing the impact of technology investment on profitability and valuation at the same time under the moderating effect of SHA. The paper also uses the RBV theory to acquire an in-depth interpretation of banks.
Aman Pushp, Bhakti Agarwal, Shailesh Rastogi· Corporate Governance : The i...· 0 citations
