278049

Business Diversification and Banks’ Performance: The Moderating Role of Credit and Liquidity Risk (Empirical Study)

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Last updated: 04 Jan 2025

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Abstract

The major objective of this study is to explore the moderating role of credit risk and liquidity risk on business diversification and banks' performance relationship, i.e., investigating the interaction relationship between banks' risks and business diversification on banks' performance. In light of this, the study also aims to examine the impact of credit risk and liquidity risk on banks' performance, especially in emerging countries like Egypt. Moreover, it seeks to test the effect of business diversification, through revenue diversification, asset diversification, and funding diversification, on banks' performance. This study depends on a sample consisting of 10 banks over the period from 2012 to 2021. The findings indicate that credit risk has a negative impact on banks' performance, whereas liquidity risk has a positive impact on banks' performance. Also, revenue diversification and asset diversification have a positive effect on credit risk, and only asset diversification has a positive effect on liquidity risk. Furthermore, all activities of diversification have an insignificant impact on banks' performance. The most important result is that credit risk and liquidity risk moderate business diversification and banks' performance relationship as credit risk changes the effect from an insignificant negative impact to a significant positive effect. Also, credit risk adjusts the impact of asset diversification from an insignificant positive impact on banks' performance to a significant positive impact. Furthermore, liquidity risk is able to convert the impact of revenue diversification on banks' performance from an insignificant negative impact to a significant negative impact.   

DOI

10.21608/masf.2022.278049

Keywords

Credit Risk, Liquidity risk, Revenue diversification, Asset diversification, Funding diversification, Banks’ performance, Moderating Role

Authors

First Name

Dr. Marwa Saber Hamoda

Last Name

Alsayed

MiddleName

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Affiliation

, Accounting Department, Faculty of Commerce Menoufia University

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Orcid

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First Name

Dr. Gihan Adel Nagi

Last Name

Amirhom

MiddleName

-

Affiliation

Accounting and Auditing Department, Faculty of Commerce,Port Said University

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City

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Orcid

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First Name

Dr. Mohsen Ebied

Last Name

A.Y. Azzam

MiddleName

-

Affiliation

Accounting Department, Faculty of Commerce, Menoufia University

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City

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Orcid

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Volume

14

Article Issue

2

Related Issue

36203

Issue Date

2022-12-01

Receive Date

2022-12-02

Publish Date

2022-12-01

Page Start

1

Page End

47

Print ISSN

2682-2113

Online ISSN

2682-2121

Link

https://masf.journals.ekb.eg/article_278049.html

Detail API

https://masf.journals.ekb.eg/service?article_code=278049

Order

8

Type

المقالة الأصلية

Type Code

863

Publication Type

Journal

Publication Title

المجلة العلمية للدراسات والبحوث المالية والإدارية‎

Publication Link

https://masf.journals.ekb.eg/

MainTitle

Business Diversification and Banks’ Performance: The Moderating Role of Credit and Liquidity Risk (Empirical Study)

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Article

Created At

22 Jan 2023