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Research aims: This study focuses on the correlation between income diversification and financial performance, taking into account banks’ size and type of ownership as well as financial crisis.Design/Methodology/Approach: This study uses financial data of 29 commercial banks in Vietnam during the period from 2005 to 2018. This research employs an Generalized Method of Moments (GMM) regression.Research findings: The results do not find a statistical evidence of a direct effect of banks’ income diversification on their financial performance. However, when considering the classification factors such as bank’s size and type of ownership, the findings show that big-scale and state-owned banks can take advantages of diversification strategies to boost their profitability. Moreover, the study proves that income diversification generates the significantly positive effect on banks’ financial performance during the time of financial crisis.Theoretical contribution/ Originality: Theoretical contribution in order to provide evidence on the direct effect of income diversification on bank’s financial performance in relation with  banks’ size and type of ownership as well as financial crisis.Practitioner/Policy implication:  Further, this research also contributes on managerial contribution for the bank’s manager, policy-makers and investors to get sight of good banks’ financial performance in the context of unstable economy.Research limitation/Implication: The limitations still exist in this research, such as: (1) the number of banks participating in the research sample is a predictable limitation; (2) this research mainly focused on financial variables but ignores the variables representing the manager’s behaviour and the bank’s organization structure; (3) the future studies can focus on these aspects to further explore the hidden picture of diversification strategy and banking performance.

Income Diversification and Financial Performance: The Mediating Effect of Banks’ Size, Ownership Structure and the Financial Crisis in Vietnam