guarantees could also amplify a moral hazard problem that induces large banks to take excessive risk. If such risk is mispriced … diversification index to account for complexity, we find robust evidence consistent with mispricing among the most diversified large …

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

-adjusted profitability are used, the risk-return trade-off seems to hold. …This paper examines the validity of the risk-return trade-off for a sample of Czech banks over the period 2002-2022 by … analysing the relationship between the bank risk and risk-adjusted returns. I find evidence of a significant negative …

The paper examines how loan portfolio diversification drives bank returns, mainly focusing on the conditioning roles of … increased sectoral loan portfolio diversification reduces bank returns, but not all banks are equally affected. Banks that … adopted a business model towards non-interest activities are hurt less from loan portfolio diversification, and bank market …

In the traditional banking model, loans play a dominant role in banks’ operations. Loan portfolio quality is the main … amount of non-performing loans may not only reduce the financial results, but also reduce the capital and increase the risk … profile of the bank. This paper investigates the influence of the non-performing loans ratio on profitability indicators in …

The paper examines whether bank diversification in multiple dimensions can protect bank lending from uncertainty shocks … banking by the dispersion of bank-level shocks. Our results confirm that banks may reduce loan growth and experience more … credit risk amid greater uncertainty. These adverse impacts of uncertainty on bank lending (both quantity and quality) are …