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Does sectoral diversification of loans and financing improve bank returns and risk in dual-banking systems?

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dc.contributor.authorMirzet Seho
dc.contributor.authorAbbas Mirakhor
dc.contributor.authorMansor H. Ibrahim
dc.date.accessioned2021-09-23T02:17:47Z
dc.date.available2021-09-23T02:17:47Z
dc.date.issued2021
dc.description.abstractThis paper investigates the effects of sectoral diversification of loans and financing on the risk and the returns of banks in dual-banking systems. We employ the system GMM estimator on a unique panel data of 46 Islamic and 60 conventional banks from six countries over the period 2000-2015. Our findings reveal that sectoral diversification of loans and financing reduces the returns and increases the risk of both Islamic and conventional banks; the impact of sectoral diversification on returns varies across risk levels, with negative effects at low- and no effect at moderate- and high-risk levels; the difference between the impacts on Islamic and conventional banks across risk levels are marginal, and the adverse effects of sectoral diversification were exacerbated during the 2008 financial crisis. Expansion of loan and financing portfolios into new sectors has no impact on bank returns and risk in our sample. The findings may provide valuable implications for all stakeholders, regulators, and policymakers.en_US
dc.identifier.citationSeho, M., Ibrahim, M. H., & Mirakhor, A. (2021). Does sectoral diversification of loans and financing improve bank returns and risk in dual-banking systems? Pacific-Basin Finance Journal, 68, Article 101619. http://doi.org/10.1016/j.pacfin.2021.101619en_US
dc.identifier.doihttp://doi.org/10.1016/j.pacfin.2021.101619
dc.identifier.issn0927-538X
dc.identifier.urihttps://ikr.inceif.edu.my/handle/INCEIF/3438
dc.languageEnglish
dc.language.isoengen_US
dc.publisherElsevier B.V.en_US
dc.rights2021. Elsevier B.V.
dc.sourceSEDONA
dc.subjectLoans and financing diversificationen_US
dc.subjectRisken_US
dc.subjectReturnen_US
dc.subjectDual-bankingen_US
dc.subjectIslamic and conventional banksen_US
dc.titleDoes sectoral diversification of loans and financing improve bank returns and risk in dual-banking systems?en_US
dc.typeJournal Articleen_US
dlc.maintopicIslamic bankingen_US
dspace.entity.typePublication
ikr.doctypeScholarly Works
ikr.topic.maintopicIslamic bankingen_US
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