Aug 2026· Review of Accounting and Finance· 0 citations· 94 references
Abstract
This study aims to investigate the effects of revenue competition, ownership structure and diversification on the performance and financial stability in banking. Using a sample of Tunisian listed banks between 2008 and 2023, the authors examine how these factors interact, with a focus on the triple interaction of ownership, competition and diversification and consider the impact of major economic and political events such as the 2008 global financial crisis, the 2011 Revolution, post-2016 banking reforms and the COVID-19 pandemic.
Using quantile regression analysis, the study evaluates the heterogeneous effects of competition, ownership structure and diversification on the performance and stability of both public and private banks. Control variables like size, capitalization, liquidity risk, asset growth, inflation and GDP growth are incorporated to capture internal and macroeconomic influences.
The findings reveal substantial heterogeneity across the performance distribution. For public banks, market power (Lerner index) enhances profitability at intermediate and upper quantiles (Q25-Q75), while state ownership exerts a consistently negative effect on both return on assets and net interest margin (NIM) across most quantiles, reflecting persistent governance rigidities. Revenue diversification deteriorates profitability among medium- and high-performing public banks (Q50-Q90) and undermines intermediation margins at the upper tail. The triple interaction of public ownership, market power and diversification further depresses NIM at Q50-Q90, pointing to a governance trap in which institutional complexity offsets any strategic gains. For private banks, private ownership strengthens intermediation margins from Q10 to Q75, while the joint effect of diversification and market power amplifies profitability among top performers but reduces it when all three factors, private ownership, market power and diversification, coexist simultaneously (Q50-Q75). External shocks, notably the 2011 Tunisian Revolution and the COVID-19 pandemic, significantly reinforce these distributional divergences.
This study makes a meaningful contribution to the existing literature by shedding light on the conditional and heterogeneous impact of diversification, competition and ownership structure on bank performance and stability within an emerging market context. Beyond individual factor effects, it offers a nuanced understanding of how the interplay among strategic and structural variables, compounded by external economic and political shocks, collectively shapes banks’ resilience. In doing so, it provides actionable insights and practical guidance for both policymakers and bank managers navigating the distinctive challenges of emerging economies.
The authors’ research work uses an original data set in banking and provides insights into how interactions among strategic and structural factors, combined with macroeconomic shocks, shape the resilience of banks, offering guidance for policymakers and bank managers in emerging economies.
The value-creation capacity of active asset management remains one of the most debated issues within modern portfolio theory. While the relationship between costs and performance is typically negative in developed markets, in smaller and less liquid markets—where information asymmetry is more pronounced—higher fees may also be interpreted as signals of managerial ability. This study investigates this apparent contradiction in the context of the Hungarian equity mutual fund market, using a panel dataset covering 79 funds over the period 2017–2024, with a particular focus on identifying non-linear effects among performance determinants. The methodological framework combines fixed-effects panel regression with Driscoll-Kraay robust standard errors, complemented by quantile regression estimates to examine different segments of the return and alpha distributions. The results indicate that growth dynamics (NAV_change) and cumulative historical performance (Yield_from_start) consistently enhance fund performance, while the negative effect of past returns suggests the dominance of mean reversion. The impact of the total expense ratio (TER) proves to be non-linear and specification-dependent—a finding con-firmed by an extensive battery of robustness checks—thereby rejecting the cost-signalling hypothesis with respect to risk-adjusted excess returns (Jensen’s alpha). Quantile estimates further reveal that the effects of economies of scale and cost structure differ significantly between underperforming and top-performing funds, confirming that analyses based on average effects obscure the heterogeneity of market dynamics. By jointly modelling returns and risk-adjusted performance across the full conditional distribution, the study contributes a distribution-sensitive theoretical account of active management’s limitations in a small, less liquid market, showing that these limitations are conditional on fund size and cost structure rather than uniform across the fund population.
László Vancsura, Tibor Tatay, Tivadar Zakár et al.· Economies· 0 citations
This paper examines the relationship between revenue diversification, profitability, and risk in European banks, with particular emphasis on the structural break induced by the COVID-19 shock. Using quarterly supervisory data from the European Banking Authority (EBA) over the period 2016Q1–2024Q4, we distinguish between pre- and post-pandemic regimes and estimate dynamic fixed-effects models that account for unobserved heterogeneity and persistence in bank performance. The results reveal a pattern consistent with regime dependence. Descriptive (quintile-based) comparisons suggest that banks with greater reliance on non-interest income tended to report higher profitability prior to COVID-19, although data limitations prevent us from confirming this pattern in a full multivariate regression for the pre-COVID subsample. In the post-COVID period, once bank and time fixed effects, persistence, and balance-sheet characteristics are properly controlled for, revenue diversification does not exert a statistically significant effect on either profitability or earnings volatility; this result is robust across bank fixed effects only, two-way (bank and time) clustered, and one-way (bank) clustered specifications. We show that diversification is systematically associated with differences in bank size, capitalization, and lending intensity, indicating that income structure is closely linked to underlying business model characteristics. These findings suggest that the observed diversification–performance relationship largely reflects cross-sectional heterogeneity rather than a stable causal effect. Overall, the evidence indicates that revenue diversification does not provide a consistent improvement in risk-adjusted performance in European banking. Instead, performance and risk dynamics are primarily driven by balance-sheet composition and persistence. The results highlight the importance of accounting for structural heterogeneity and macroeconomic regimes when evaluating the role of non-interest income in bank performance.
Ifigeneia Persaki, Fotios Siokis· Journal of Risk and Financia...· 0 citations
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.
F. Anande-Kur, Suresh Ramakrishnan, Khartic Rao Manokaran et al.· Asian Journal of Empirical R...· 0 citations
This study examines the impact of Basel III banking reforms on the financial performance and stability of the banking sector in Pakistan. The study focuses on key Basel III regulatory indicators, including the Capital Adequacy Ratio and Leverage Ratio, and evaluates their association with financial performance and stability indicators such as Return on Equity, Return on Assets, Earnings per Share, Non-Performing Loans and Z-Score. A quantitative research approach is adopted using secondary panel data from selected commercial banks operating in Pakistan. The data are analysed using descriptive statistics, correlation analysis, fixed- and random-effect models, and the Hausman specification test. The fixed effect model indicates that bank-specific characteristics significantly influence the relationship between Basel III reforms and banking outcomes. The findings suggest that Basel III reforms have a meaningful role in strengthening capital adequacy, improving risk management and supporting banking sector stability, although their effect on profitability is mixed. The study provides useful implications for regulators, policymakers and banking institutions in Pakistan.
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Nadeem Khan Junejo, Hasnain Manzoor, Imran Shauqat· Journal of Business Insight...· 0 citations
This study examines the transformation of banking risks and their impact on the financial stability of Ukraine’s banking system under prolonged systemic shocks. The purpose is to identify the relationships among shock sources, banking risks, transmission channels, indicators of financial materialisation, and shock-absorption mechanisms, with particular attention to the full-scale war. The empirical analysis covers 2018–2025 and uses official data from the National Bank of Ukraine, including non-performing loans, provisioning, profitability, lending, customer funds, capital and liquidity indicators, and the Financial Stress Index. A quantitative structural-dynamic design is applied, combining phase-based comparison, analysis of rates of change and percentage-point shifts, and triangulation of financial evidence for hypothesis testing. The results show that the 2022 shock simultaneously activated credit, market, foreign-exchange, interest-rate, operational, and macrofinancial risks, but their materialisation was asymmetric. Asset quality and profitability deteriorated sharply, whereas customer funding, liquidity, and solvency remained comparatively resilient. In 2023–2025, profitability, lending, and asset quality recovered while the underlying military shock persisted. This pattern indicates that financial stability under a prolonged systemic shock depends not on the disappearance of risk but on the banking system’s capacity to limit transmission, absorb losses, and adapt its operating mechanisms. The scientific novelty lies in distinguishing resistance, primary adaptation, and adaptive resilience as successive stages of banking-system response and in defining adaptive resilience as the capacity to maintain and develop core banking functions while the source of systemic shock remains active. The findings support an interconnected but asymmetric interpretation of risk transmission and demonstrate the mediating role of capital, liquidity, stable funding, profitability, and operational continuity in preventing materialised risks from escalating into systemic banking destabilisation. The findings may be useful for researchers studying financial stability and systemic risk, central banks and supervisory authorities developing macroprudential and prudential responses to prolonged shocks, and banking institutions seeking to strengthen risk management, stress-testing practices, and financial and operational resilience.
I. Vakhovych, I. Boiarko, Olena Zarutska et al.· Financial and credit activit...· 0 citations
The profitability of a country’s banking sector is a critical indicator of its overall economic health. This study examines the impact of financial risk on the performance of the banking sector in India, with a specific focus on identifying the moderating factors that influence this relationship. Using data from 26 Indian banks listed on the stock exchange from 2012 to 2023, the research employs fixed effects regression to investigate the relationship between financial risk and performance. Return on assets (ROA) and return on equity (ROE) were used as the key indicators of financial performance. The independent variables include credit risk (CR), capital adequacy ratio (CAR), liquidity risk (LR), loan-to-deposit ratio (LDR), interest rate risk (IRR), and market risk (MR). The results indicate a significant effect of financial risk on the financial performance of banks, with varying levels of significance at different risk levels. Furthermore, moderated regression analysis was applied to examine the effect of various macroeconomic and bank-specific moderating factors on the association between financial performance and financial risk. The findings provide valuable insights into the risk-performance dynamics within the Indian banking sector.
Harsha Motyani, R. Kothari· International Journal of Ban...· 0 citations
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