The Impact of Bank Asset Diversification According to Shannon Entropy in the Financial Performance of Conventional Yamani Banks: Fieldwork Study for 2012-2021 10.35781/1637-000-126-006

Abstract

The study aimed to examine the impact of bank asset diversification according to Shannon entropy in the financial performance of Yemeni banks by analyzing the dimensions of the independent variable (diversification of each asset across conventional) on the dependent variable, represented by the return on assets (ROA). The study relied on published financial reports from 6 Yemeni banks from 2012 to 2021. Methodologically, the study employed descriptive, analytical, and econometric approaches to explore the relationship between the independent and dependent variables, using linear regression and cross-sectional data analysis via statistical models (EViews 13 & Excel 2010). The Shannon Entropy equation was used to measure diversification levels. The study found a statistically significant positive Impact of the Independent variables on the dependent variable. Financial assets were found to be traditional, with varying ROA across banks. Relative concentration in treasury bills and current accounts at the central bank (for conventional banks) and real estate Investments (for Islamic banks).