Diversification and Connections in Banking: First Findings

Claudio Zara and Luca Cerrato
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Claudio Zara: Bocconi University
Luca Cerrato: Bocconi University

Chapter 5 in Liquidity Risk, Efficiency and New Bank Business Models, 2016, pp 93-125 from Palgrave Macmillan

Abstract: Abstract Literature on the diversification of banks usually refers to revenue mix, geographical markets and M&A deals. This chapter aims to fill a gap by investigating diversification in terms of different business combinations (carrying out activities in different client front-end businesses). We built a proprietary dataset of 92,747 half-year observations from data at both divisional and corporate levels. Retail banking, corporate banking, private banking and investment banking are the main business combinations in which banks operate. We discovered that the four business combinations are poorly correlated, as is evident from the low correlation coefficients between variables pertaining to them. This finding supports the diversification efforts carried out by banks’ managers in the first decade of this century.

Keywords: International Financial Reporting Standard; Generally Accept Accounting Principle; Diversification Strategy; European Bank; Retail Banking (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-319-30819-7_5

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DOI: 10.1007/978-3-319-30819-7_5

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