risk factors, we separate the bank-specific selection and monitoring abilities from the composition of the loan portfolio …, on average, lower loan losses, (b) the loss rate of a given industry in a bank's loan portfolio is lower if the bank has …

Should banks be diversified or focused? Does diversification indeed lead to enhanced performance and, therefore …, greater safety for banks, as traditional portfolio and banking theory would suggest? This paper investigates the link between … banks? profitability (ROA) and their portfolio diversification across different industries, broader economic sectors and …