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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
      
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Should banks diversify or focus? Know thyself: The role of abilities, Economic Systems 1; March (2018). Francis, Bill B.; Hasan, Iftekhar; Küllü, A. Melih; Zhou, Mingming


Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Francis, Bill B.; Hasan, Iftekhar; Küllü, A. Melih; Zhou, Mingming 
Number of authors
Status Published
Year of publication 2018 
Date 15.03.2018 
Name of article Should banks diversify or focus? Know thyself: The role of abilities 
Name of journal Economic Systems
Volume of issue 42 
Number of issue 1; March 
Pages 106-118 
Abstract
The paper investigates whether diversification/focus across assets, industries and borrowers affects bank performance when banks’ abilities (screening and monitoring) are considered. The initial results show that diversification (focus) at the asset, industry and borrower levels is expected to decrease (increase) returns. However, once banks’ screening and monitoring abilities are controlled for, the effect of diversification/focus either gets weaker or disappears. Further, in some cases, these abilities enhance banks’ long-run performance, but in others they prove to be costly, at least, in the short run. Thus, the level of monitoring and screening abilities should be taken into consideration in understanding, planning and implementing diversification/focus strategies.
Free text descriptor in Finnish pankit; strategiat; hajautus; varainhoito 
Free text descriptor in English Asset diversification; Industry diversification; Borrower diversification; Monitoring; Screening; Bank performance 
JEL-codes G21; G28; G34 
ISSN / e-ISSN 0939-3625 
auki Internet addresses
Additional information Available online 31 January 2018.