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Bank value and geographic diversification: regional vs global

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  • Yildirim, Canan
  • Efthyvoulou, Georgios

Abstract

This paper analyzes the impact of geographic diversification on bank value by employing a data set comprising the largest banks across the world, originating from both developed and emerging countries. The findings suggest that the value impact of international diversification depends on a bank's home country: higher levels of diversification are associated with changes in valuations only for banks originating from emerging countries. In addition, the locus of destination of the diversification efforts matters for the direction of effects: while higher levels of intra-regional diversification lead to value enhancement, higher levels of inter-regional diversification seem to induce a negative (but statistically less robust) effect on the valuation of emerging country banks.

Suggested Citation

  • Yildirim, Canan & Efthyvoulou, Georgios, 2018. "Bank value and geographic diversification: regional vs global," Journal of Financial Stability, Elsevier, vol. 36(C), pages 225-245.
    • Handle: RePEc:eee:finsta:v:36:y:2018:i:c:p:225-245
    DOI: 10.1016/j.jfs.2018.04.003
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    More about this item

    Keywords

    Multinational banking; Geographic diversification; Bank value;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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