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Income Diversification, Market Power and Performance

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  • Peter Nderitu GITHAIGA

    (Moi University)

Abstract

This paper aims at examining the mediating role of market power on income diversification and performance nexus. Using 310 yearly observations drawn from a sample of 31 Kenyan commercial banks and panel data for the 2008–2017 periods, the study finds that market power significantly mediate the relationship between income diversification and performance. Thus, income diversification will have a larger impact on performance for banks with significantly high market power compared to those with low market power. Given the novelty of these findings, the study has implications for bank regulators, scholars and practitioners.

Suggested Citation

  • Peter Nderitu GITHAIGA, 2019. "Income Diversification, Market Power and Performance," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 3(2), pages 1-21.
    • Handle: RePEc:trp:01jefa:jefa0030
    DOI: 10.1991/jefa.v3i2.a26
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    More about this item

    Keywords

    Income diversification; Non-interest income; Market power; Firm performance; Herfindahl-Hirschman Index.;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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