What is it about?

The study found that income diversification in Ghanaian banks initially decrease their performance measures such as profitability, profit efficiency and stability. As banks continue to diversify their income sources, they end up benefiting from it which results in the increase of their profit efficiency and financial stability. Considering how banks diversify their assets, the study found that such decisions do not affect profits, efficiency or stability.

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Why is it important?

The study explores the diversification strategy of banks at a period when banks were at the peak of a looming financial crisis. It offers a timely explanation of what transpires in the Ghanaian context, which can apply in developing countries and emerging markets.

Perspectives

When banks do other businesses apart from giving of loans, they have the tendency to do better and be stronger. No wonder the non-performing loans are a critical cost item that reduces performance. Could this be time to use artificial intelligence and machine learning in the areas of loan management?

Mr King Carl Tornam Duho
Dataking Consulting

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This page is a summary of: Bank diversification and performance in an emerging market, International Journal of Managerial Finance, August 2019, Emerald, DOI: 10.1108/ijmf-04-2019-0137.
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