Financial Institutions and Services


  • Collective Authors


Diversification is a key area in financial institution since their activities have gone beyond
the traditional intermediary role. It is in this view that the study examines the effect of operational
diversification on bank performance using the pooled, fixed, random and System GMM for the period
2006 to 2015 across 250 commercial banks from 30 countries in the region. Due to the robustness of
SYS-GMM, the findings of this study reveal that using Herfindahl Hirschman index, all the
dimensions of operational diversification; asset, liability, deposit and income including control
variables such as bank size, liquidity, loan loss ratio, cost to income ratio and the lagged return on
average asset (ROAA (L1)) are significant at 1% level with only deposit diversification (HHIde),
liquidity (LOD) and cost to income ratio (CIR) which is a measure of banks‟ efficiency having
negative relationship with ROAA. Therefore, this study concludes that diversification of operational
activities in SSA commercial banks have direct and significant effect on their financial performances.
But, greater attention should be taken to monitor the diversification strategy so as to ensure that no
dimension of banks‟ activities is neglected.


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How to Cite

Collective Authors. (2021). Financial Institutions and Services: Array. Acta Universitatis Danubius. Œconomica, 13(5). Retrieved from