International Journal of Advanced Multidisciplinary Research and Studies
Volume 3, Issue 3, 2023
Relationship Between Bank Diversification and Bank Performance
Author(s): Nkiru Patricia Chude, Daniel Izuchukwu Chude
The study analyzed the relationship between bank diversification and bank performance. The specific objectives of this study were; To ascertain the effect of diversification into bank on loans Ascertain the effect of diversification into bank commission on turnover on the financial performance of deposit money banks in Nigeria bank. Examine the effect of commission on turnover on the financial performance of deposit money banks in Nigeria. Find out how diversification into income from foreign exchange trading has affected the financial performance of deposit money banks in Nigeria. Determine the effect of diversification into investment income on the financial performance of deposit money banks in Nigeria. Commission on turn over, bank loans, income from foreign exchange and investment income were the independent variables while return on assets as dependent variable. The ex-post facto research design was adopted. Secondary data obtained from the central bank of Nigeria statistical bulletin. Descriptive statistics, correlation matrix and regression methods of data analysis were employed for the study. The findings show that diversification into commission on loan has a significant effect on financial performance of commercial banks in Nigeria. Diversification into foreign exchange trading income does not significantly affect the performance of commercial banks in Nigeria. Diversification into investment income on the financial performance of commercial banks in Nigeria is not significant. Diversification into leverage on the financial performance of commercial banks in Nigeria is significant. The researcher recommends that diversification leads to better firm performance in the long run as poor performance in one market or product line is compensated by better performance in other markets and product lines. Diversification increases the market share and the growth prospects of firms. This study therefore recommends that firms pursue diversification strategy to diversify their risk exposures.
Keywords: Diversification, Bank Performance, Leverage, Commission on Loan, Foreign Exchange Trading, Bank Loans
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