Diversification of Banking Activity and Its Importance in Building Financial Stability

Renata Karkowska

A chapter in Global Versus Local Perspectives on Finance and Accounting, 2019, pp 79-88 from Springer

Abstract: Abstract The most recent financial crisis has shown, however, that this form of investment may entail costs: although diversification reduces the bankruptcy chances for an individual bank. This study seeks to verify the importance of non-traditional banking activity for the financial stability of banks, using a sample of 1430 banks on a global scale, in 1995–2015. In particular, it verifies the fluctuations of the stability of commercial banks in the context of their asset levels. The study results have shown that the diversification of commercial banks’ income into non-traditional activities adversely affects their stability, with varying intensity for the different groups of asset volume. The study contributes to the ongoing discussion on the separation of retail and investment banks with a view to enhancing their resilience to losses and bankruptcy risk.

Keywords: Banking; Financial stability; Non-traditional banking activity; Financial risk (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-11851-8_8

Ordering information: This item can be ordered from
http://www.springer.com/9783030118518

DOI: 10.1007/978-3-030-11851-8_8

Access Statistics for this chapter

More chapters in Springer Proceedings in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().