Quarterly Studies in Banking Management and Islamic Banking

Investigating the Effect of Income Diversity on the Iranian Banks’ Performance

Document Type : Original Article

Authors

Mohammad Ali Dehghan Dehnavi 1
Ahmad Kianian 2
Ali Balavandi 3

1 Assistant Prof., Department of Finance and Islamic Banking, Faculty of Management and Accounting, Allameh Tabataba’i University, Tehran, Iran

2 M.A., Department of Economics, University of Shahid Beheshti, Tehran, Iran

3 M.A., Department of Economics, University of Allameh Tabataba'i, Tehran, Iran

https://doi.org/10.22034/jifb.2020.200464.1143
Abstract
Nowadays, with the advances in technology, offering various bank services besides the traditional role of the banks (depository and lending) has taken on tremendous importance; as a result many banks formulate their revenue-increasing and marketing strategies so as to increase their own share of such revenue. Therefore, studying the effect of this type of income on the banks’ performance can be of considerable importance for both the banks and banking sector supervisor in order to establish apt and clear policies in this area. The present study uses panel data econometric method, financial statements and statistics of 17 domestic banks in order to investigate the effect of income diversity and non-interest income on the banks’ performance from 2006 to 2017. The results show that increasing in the income diversity improves the performance of the banks. Also, an increase in the share of non-interest income from banks' revenue is directly correlated with their performance.

Keywords

Fee Income
Income Diversity
Non-Interest Income
Banks’ Performance

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