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Discussion Paper Series 2: Banking and Financial Studies, Deutsche Bundesbank >

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http://hdl.handle.net/10419/19752
  

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dc.contributor.authorvon Westernhagen, Nataljaen_US
dc.contributor.authorPorath, Danielen_US
dc.contributor.authorHayden, Evelynen_US
dc.coverage.temporal1996-2002en_US
dc.date.accessioned2009-01-28T16:02:54Z-
dc.date.available2009-01-28T16:02:54Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/19752-
dc.description.abstractShould 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 geographical regions measured by the Herfindahl Index. To explore this issue, we use a unique data set of the individual bank loan portfolios of 983 German banks for the period from 1996 to 2002. The overall evidence we provide shows that there are no large performance benefits associated with diversification since each type of diversification tends to reduce the banks? returns. Moreover, we find that the impact of diversification depends strongly on the risk level. However, it is only for moderate risk levels and in the case of industrial diversification that diversification significantly improves the banks? returns.en_US
dc.language.isoengen_US
dc.relation.ispartofseriesDiscussion Paper, Series 2: Banking and Financial Supervision 2006,05en_US
dc.subject.jelG21en_US
dc.subject.jelG28en_US
dc.subject.jelG32en_US
dc.subject.ddc330en_US
dc.subject.keywordfocusen_US
dc.subject.keyworddiversificationen_US
dc.subject.keywordmonitoringen_US
dc.subject.keywordbank returnsen_US
dc.subject.keywordbank risken_US
dc.subject.stwBanken_US
dc.subject.stwKreditgeschäften_US
dc.subject.stwDiversifikationen_US
dc.subject.stwPortfolio-Managementen_US
dc.subject.stwDeutschlanden_US
dc.titleDoes diversification improve the performance of German banks? Evidence from individual bank loan portfoliosen_US
dc.typeWorking Paperen_US
dc.identifier.ppn515396923en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
dc.identifier.repecRePEc:zbw:bubdp2:4536-
Appears in Collections:Discussion Paper Series 2: Banking and Financial Studies, Deutsche Bundesbank

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