Risk-adjusted profitability and stability of Islamic and conventional banks: Does revenue diversification matter?

Revenue diversification in banking offers opportunities and threats. Recent academic research shows that disadvantages may outweigh advantages, terms of both volatility profitability bank riskiness. Literature on this topic emerging countries the field Islamic finance is limited: our aim to empirically test if revenue diversity affects banks differently than conventional institutions. We analyze impact income firm-risk selected OIC countries, period 2007–2016, using a comprehensive dataset 47 154 banks, through diverse measures econometric approaches. find provides lower rewards for with effects are stronger accounting-based rather market-based metrics. Shares non-interest positively contribute regardless business model, whereas not significant effect risk-adjusted banks. Moreover, we do any relationship between stability