The focus on revenue diversification and loan diversification as key factors in improving the performance and financial sustainability of banks in Iran is crucial. This study examines the effects of revenue diversification and loan diversification on the performance and financial stability of Iranian banks from 2006 to 2021. Utilizing the dynamic panel data approach, this study analyzes data from 15 private and state-owned Iranian banks. The results indicate that diversification in non-traditional revenues and granted loans significantly contributes to the improvement of financial performance. Furthermore, the proper management of financial ratios, including the deposit-to-asset ratio and loan-to-asset ratio, leads to enhanced financial sustainability of banks. These findings emphasize that revenue diversification and loan diversification serve as effective tools for improving performance and financial sustainability within the Iranian banking system.
