Journal of Finance and Bank Management

Effect of Loan Diversification on Risk and Returns: An Empirical Study of Central Cooperative Banks in Punjab
Dr. Ravi Inder Singh

Abstract
The paper attempts to analyze the cause and effect relationship between loan diversification, return and risk in cooperative banks after the adoption of New Economic Policy (NEP) in 1991. In the wake of reconstruction in the organization w.r.t business, the role of financial intermediaries needed reexamination. Through statistical measures, investigation into the nature and form of interrelationship between the variables was measured. The study carried on Central Cooperative banks of Punjab found that diversification has adversely affected the yield on assets. Further, diversification has not helped the banks in reducing risk.

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