Diversification and Stability of African Banks

Authors

  • Isaac Boadi University of Professional Studies, Accra, Ghana
  • Daniel Osarfo University of Ghana
  • Vida Commey Kumasi Technical University

DOI:

https://doi.org/10.33423/jabe.v22i3.2852

Keywords:

Business, Economics, Banks, Diversification, Islamic, generalized methods of moments (gmm), Africa

Abstract

The present study empirically examines whether banks operating within Africa concentrate or diversify their incomes and loan portfolios and how these decisions affect their stability. The present study uses Generalized Methods of Moments (GMM) as the econometric tool in carrying out the analysis. The study shows that banks in Africa are relatively stable and well diversified. However, income diversification strategies do not enhance banks’ stability. Loan portfolio concentration guarantees a reduction in bank credit risk and boosts stability. Overall, loan portfolio concentration is therefore more important for stability than income diversification among banks in Africa.

Downloads

Published

2020-07-29

How to Cite

Boadi, I., Osarfo, D., & Commey, V. (2020). Diversification and Stability of African Banks. Journal of Applied Business and Economics, 22(3). https://doi.org/10.33423/jabe.v22i3.2852

Issue

Section

Articles