Graduate Program in Economics.Kuzubaş, Tolga Umut.Er, Tarık Alperen.2025-04-142025-04-142023Graduate Program in Economics. TKL 2023 U68 PhD (Thes PSY 2023 D74https://digitalarchive.library.bogazici.edu.tr/handle/123456789/21681This thesis examines the impact of income diversification on bank performance by using the quarterly data of commercial banks from a large developing economy, Türkiye. The results show that diversification towards non-interest income generating activities improves bank profitability. Moreover, this improvement in bank profitability does not arise with the cost of higher risk. In other words, the higher degree of income diversification does not harm the risk-return trade-off (risk- adjusted profitability) because the gains in profitability offset the increase in earnings volatility. The results are also robust to the choice of the sample period, to the choice of explanatory variables, and to the examination of risk-return trade-off with a shorter-term risk perspective. Considering that Turkish commercial banks have a relatively lower share of non-interest income, this study underscores an implication for bank management and regulators that there can be still untapped potential for banks to be exploited through the diversification of income generating activities.Banks and banking -- Turkey.Income -- Econometric models.viii, 45 leaves