Income Diversification in the German Banking Industry

Busch, Ramona; Kick, Thomas

doi:10.2139/ssrn.1342282

Cited by 4 publications

(3 citation statements)

References 24 publications

(24 reference statements)

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“…The study suggests Non-performing loans and loan loss provisions have a positive relationship with Net-II and this positive association overcome the benefits exposed by the shareholders. It is evident from the table 5, that non-performing loans ratio has increased while risk-adjusted ROE has declined over the period .This is consistent with results presented by Kick and Busch (2009). They argued that loan loss provision has a positive relationship with Net-II which negatively impact upon the risk-adjusted returns of the commercial banks.…”

Section: Discussion Of Findingssupporting

confidence: 85%

Income Diversification and Bank Risk-Return Trade-Off: Evidence from an Emerging Economy

Ekanayake

Wanamalie²

2017

Asian Economic and Financial Review

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Section: Discussion Of Findingssupporting

confidence: 85%

Income Diversification and Bank Risk-Return Trade-Off: Evidence from an Emerging Economy

Ekanayake

Wanamalie²

2017

Asian Economic and Financial Review

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“…This positive relationship in Table 4 documents that a unit increase in competition in the banking industry leads to a 74.65% increase in the diversification index. This finding is consistent with the results by earlier studies of Ashraf et al (2020), Bogdan et al (2020) and Kick and Busch (2009). The results of Table 5 also confirm that competition exerts a significantly positive effect on the ratio of NON/OI, suggesting that competition in the Indian banking sector motivates banks to engage in non-interest income‐generating activities.…”

Section: Resultssupporting

confidence: 91%

“…The LLP ratio (loan loss provisions) represents a positive coefficient, just as in earlier studies by Kick and Busch (2009) and Pennathur et al (2012), but it is not a significant driver of income diversification in both models. Hence, our findings indicate that the extent of income diversification among Indian banks does not seem to be determined by loan loss provision.…”

Section: Resultssupporting

confidence: 49%

Determinants of income diversification: empirical evidence from Indian banks

Thakur,

Arora

2023

IJLMA

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Purpose This study aims to explore the determinants (bank-specific, industry-specific and macroeconomic) of income diversification across interest income and non-interest income as well as for non-traditional income sources (non-interest income) from 2004–2005 to 2021–2022. Design/methodology/approach An unbalanced data set comprising 110 Indian commercial banks with 1480 observations is sampled in this study. Because of the bounded nature of the dependent variables (proxies of income diversification), the panel Tobit regression model is used. Findings The findings reveal that income diversification is positively influenced by bank size, technological advancements, cost–income ratio, return on assets, market competition and inflation in the economy. However, the decision to diversify income sources is adversely impacted by the capital ratio, GDP and financial intermediation ratio. Moreover, factors such as asset quality (loan loss provisions) and liquidity ratio do not directly influence the diversification strategies in the Indian banking industry. Practical implications The present study uses an extensive set of variables to provide insights into key factors for bank managers, regulators and policymakers to consider before developing diversification strategies. Originality/value To the best of the authors’ knowledge, this is the first study to examine the various bank-specific and macroeconomic determinants that affect income diversification in the Indian banking sector. The current study also investigates new variables such as technological advancements and a market concentration index for measuring competition, which have not been investigated in existing literature concerning bank income diversification in the Indian context.

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Determinants of banking stability in India

Kaur,

Kaur

2024

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Purpose This study aims to examine the various internal and external factors affecting the financial stability of Indian Commercial Banks. The aim is to improve the effectiveness of the Indian banking system in facilitating the transmission of monetary policy and to strengthen its resilience in the event of a banking crisis. Design/methodology/approach A panel data regression analysis is employed on unbalanced panel data of Indian commercial banks including public sector, private sector and foreign sector banks for the period of 2005–2022. Findings This study revealed that Indian banks with higher profits and high capitalization are more stable than others. However, banks with large bank size and high management costs are less stable as compared to other banks. In the case of macroeconomic variables, foreign exchange reserves have a significant positive impact on banking stability. Moreover, the unemployment rate has a significant negative impact on the banking stability of India. Research limitations/implications Research identifies relevant micro and macroeconomic drivers pertaining to India’s banking stability, a developing economy. These findings have significant implications and can attract the attention of analysts, regulators, bankers and academicians in this area. Nevertheless, the scope of the study is limited to the variables chosen to evaluate their contribution to banking stability, but other variables may influence Indian banking conditions. Practical implications Indian banks are advised by the research to place a high priority on profitability, capitalization and effective risk management. Customers and investors should choose banks with strong metrics. The priorities for policymakers should be preserving robust reserves and tackling unemployment with focused initiatives. Adopting digitalization can improve banks’ customer service and operational effectiveness, which is important for overcoming economic obstacles. These tactics provide doable measures to improve the resilience and stability of the banking industry in India and other emerging nations. Originality/value This research differentiates from the rest by focusing solely on the Indian banking system, in contrast to previous ones that often treated India as part of a bigger part like the BRICS or South Asia continent. It acknowledges the need to comprehending the unique traits and difficulties faced by the Indian banking system. Moreover, the current study distinguishes itself by focusing on the combined impact of microeconomic and macroeconomic indicators in the Indian context, unlike earlier research that concentrated on assessing the effects of individual variables. The current study also investigated new variables like corporate governance and foreign exchange reserves in the context of Indian banking which have not been explored by existing literature. Research is also crucial in the context of the analysis’s time frame, since it captures the period of economic transformation that included demonization, implementation of GST, major mergers and global COVID-19 pandemic.

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Income Diversification in the German Banking Industry

Cited by 4 publications

References 24 publications

Income Diversification and Bank Risk-Return Trade-Off: Evidence from an Emerging Economy

Income Diversification and Bank Risk-Return Trade-Off: Evidence from an Emerging Economy

Determinants of income diversification: empirical evidence from Indian banks

Determinants of banking stability in India

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