This paper investigates the effects of focus versus diversification on bank performance using data on Chinese banks … bank managers and regulators in China as well as in other emerging economies … during the 1996-2006 period. We construct a new measure, economies of diversification, and compare the results to those of …

Conventional wisdom in banking argues that diversification tends to reduce bank risk and improve performance, but the … recent financial crisis suggests that aggressive diversification strategies may have resulted in increased risk taking and … diversification strategies and the risk-return tradeoff in banking. Our data set covers Russian banks during the 1999-2006 period and …