Income diversification and bank performance: evidence from Turkish banking sector

Abstract

In this study, relationship between non-interest income generating activities (income diversification) and risk-adjusted bank performance is investigated by using yearly data of Turkish deposit banks for the period of 2005-2011. System Generalized Method of Moments (System-GMM) estimators are used in this study with an unbalanced panel dataset of 26 banks. Our empirical results indicate that income diversification increases risk-adjusted financial performance of Turkish deposit banks.