This paper is a contribution to the ongoing debate on the benefits and drawbacks of bank revenue diversification. Revenue diversification may benefit banks if diversified activities are inherently less risky and possess high returns, while it may hurt banks if diversified activities are more...

This paper reexamines a recent contribution to the theory of wealth accumulation under income uncertainty by Ricardo Caballero in this Review. First we develop a more general model which generates a richer variety of results and this enables us to place the role of income uncertainty into a more...