Abstract
This study examines the effect of income diversification on bank risk in Vietnam over the period of 2006 to 2014. Our findings suggest that commercial banks that have shifted to non-interest income activities tend to face greater risk. This somewhat conflicts what has been suggested by diversification strategy in terms of risk reduction. Our results demonstrate that Vietnamese banks should focus on traditional lending activities, especially for small banks in Vietnam, given that diversification may add more risk for individual banks and banking system as a whole.
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