Premium
Does Bank Diversification Improve Output Growth? Evidence from the Recent Global Crisis
Author(s) -
Mirzaei Ali,
Kutan Ali M
Publication year - 2016
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/irfi.12078
Subject(s) - diversification (marketing strategy) , financial crisis , financial system , business , resilience (materials science) , psychological resilience , economics , monetary economics , macroeconomics , physics , marketing , thermodynamics , psychology , psychotherapist
This study examines whether the diversity of activities conducted by the banking sector in the years approaching the recent global financial crisis alleviated the adverse impact of the crisis. Using data for 28 industries in 66 countries, we find that bank diversification has strengthened country resilience to the crisis, as measured by industry growth over the period 2008–2009. However, we find that while both bank‐based and market‐based economies have been affected negatively by the crisis, the contribution of bank diversification in mitigating the real impact of the crisis is pronounced only in bank‐based economies. Overall, our findings suggest that countries with significant bank diversification have also been the most resilient to the recent global crisis.