The Impact of Revenue Diversification on Commercial Bank’s Profitability & Stability

Abstract

This study examines the impact of banks revenue diversification on the bank’s profitability and stability in an emerging economy like Egypt using a sample of 13 banks that are listed in the Egyptian Stock Exchange for 12 years from (2008) to (2020) and the data is collected from the financial statements of the banks. The interest income and non-interest income are two income streams for the bank income source diversification. Non-interest income to total income ratio is used as a measurement of banks revenue diversification, also bank performance is measured through return on assets (ROA). The relationship of interest income and non-interest income is studied using multiple regressions over the period of study. Findings indicated that revenue diversification has a negative insignificant impact on the profitability of banks. However, revenue diversification has a negative significant impact on the stability of banks