Does diversification affect financial stability? Evidence from Islamic and conventional banks
by Rabia Asif; Waheed Akhter; Zunaina Zulfiqar; Muhammad Fiaz
International Journal of Trade and Global Markets (IJTGM), Vol. 16, No. 1/2/3, 2022

Abstract: The repeated waves of the global financial crisis have impacted financial industry stability, especially commercial banks. Resultantly, banking stakeholders have taken steps to enhance the stability of these institutions. Diversification is considered effective in resolving the effects of the crisis. In this regard, a shift towards non-traditional revenue sources acts to enhance resilience. Bank size is important in shaping the relationship between diversification and financial stability. Previous literature has documented enough evidence on bank size and stability to show high resilience for large banks. Islamic banks are not as large as conventional banks, whether their resilience is equal to conventional banks? Using panel data from the banking sector, this study determines the impact of diversification on banking stability regarding bank size. The study results approve the full mediation of bank size on diversification and financial stability relations. Further, Islamic banking is found to be as resilient as conventional banking in the sample countries.

Online publication date: Fri, 06-Jan-2023

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Trade and Global Markets (IJTGM):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com