The effects of loan and financing portfolio diversification on bank returns and risk in dual-banking systems
The issue of whether banks should diversify or focus their portfolios is theoretically and empirically open to debate. Traditional wisdom in banking argues that diversification can reduce risk and improve retums. The theory of corporate finance, however, contends that diversification increases earnings volatility, write-downs and write-offs, agency problems and inefficiency. While the former suggests that banks should be as diversified as possible, the latter recommends that banks should focus their activities. In an attempt to test these arguments, numerous empirical studies have been conducted - primarily on conventional banks in single-banking systems from developed economies and large emerging market countries. However, there is no consensus thus far as there is evidence supporting both arguments. In other words, no single strategy can be uniformly applied across banks from different countries ...
Banks and banking , Loans , Financing , Risk , Dual-banking systems
Seho, M. (2018). The effects of loan and financing portfolio diversification on bank returns and risk in dual-banking systems (Doctoral dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/3029