Diversification is a strategic option that many managers use to improve their firms’ performance. This interdisciplinary research attempts to verify whether firm level diversification has any impact on performance. The study finds that on average, diversified firms show better performance compared to undiversified firms on both risk and return dimensions. It also tests the robustness of these r...

Today, in many countries, there are many banks engaging in financial derivatives trading to manage risks. This paper selects data on financial derivatives trading from US banks and FRED to analyze the effect of financial derivatives trading on US banks and its economy. The results show that the impact of total financial derivatives trading revenue on bank residual (assets less liabilities) is b...

We assess the impact of geographic diversification on a bank’s costs interest-bearing liabilities. employ new identification strategy and discover that expansion across U.S. states lowered funding costs. Consistent with facilitating risk diversification, we find (1) fall more when banks expand into whose economies are less correlated banks’ state (2) reduces uninsured, but not insured, deposits...

I ncreased expenditures and the government size is an important issue in public sector economics. In this regard, various theories have been developed in order to justify the reasons for the public expenditure growth, and the theories have been empirically tested. One of the outlooks explaining the government expenditures growth and the economy size, is fiscal illusion approach. According ...

Banks face a tradeoff between diversifying and focusing their loan portfolio. In this paper we carry out an empirical study for the German market to shed light on the question whether or not the benefits of risk sharing outweigh those of specialization. We use data from the Bundesbank’s quarterly borrowers statistic to determine the degree of diversification in the banks’ loan portfolios and co...