Relationship Among Revenue Diversification, Stability and Performance: Evidence from South Asian Banks

Abstract

The study aims to investigate on the association among the revenue diversification, stability and bank performance of South Asian countries. The panel data sample of 89 banks from Pakistan, India, Bangladesh and Sri Lanka ranging for the period 2008 to 2014 were collected from the financial statements. Revenue diversification was taken as independent variable, whereas Return on Assets (Equity) ROA, ROE, Standard Deviation of Return on assets (equity) SROA, SROE, Z-score, Loan Losses Reserve to Non-performing loan LLRN, Non-performing loan to total loan (equity) NPLTL and NPLTE dependent variables. It was found a significant positive relationship between the revenue diversification and banks performance. Furthermore, it was concluded that the risk could be reduced and stability improved in South Asian banks through the strategy of diversification.

Keywords: Revenue, Diversification, Banks Performance, South Asian Countries, Stability