摘要：Using annual financial information from Malaysian banks over the period of 2005-2015, we study the diversification
effect on bank's performance. Specifically, we test the link between non-interest income and risk-adjusted
performance. Our fixed effect panel regression results show that income diversification increases bank's performance
confirming risk reduction hypothesis and resource-based view theory. In our view, the less integrated financial market
in Malaysia gives advantage for Malaysian banks to achieve better diversification gains. Moreover, the surging of
Islamic banking might play important role to the performance of income diversification. Further research is needed to
explore further other possibilities that may explain this association.
