Is bank diversification a linking channel between regulatory capital and bank value?

This study investigates the interrelationship between bank regulatory capital and diversification. We argue that might act as a substitutive mechanism of diversification to alleviate bank's default risk. As result, is likely discourage firms from excessive diversification, which in turn indirectly improve value. Using sample listed banks developed countries 2011 2017, we find total inversely associated with Narrower ratios only have significant association income-based but not asset-based Our results also reveal an indirect effect on value mediated by (i.e. indirect-only mediation). Overall, our provides novel insights into complementarity institutional strategic domains so understand far-reaching implications regulation reforms for behaviour banking companies. • The influence Basel III Evidence spillover effects levels. Regulatory negatively An