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How Do Stock Markets Value Bank Diversification? Evidence from the Eurozone

In: Corporate Governance in the Banking and Financial Sector

Author

Listed:
  • Shaker Ahmed

    (University of Surrey)

  • Laura Baselga-Pascual

    (University of Deusto)

  • Timothy King

    (University of Vaasa)

Abstract

We determine whether and how functional diversification affects the market-based long-term performance and risk profile of banks. Using a sample of listed banks from 11 Eurozone countries, we test the effects of revenue and asset diversification on bank franchise values and riskiness. Our results show that revenue diversification does not affect franchise values but does increase riskiness while concentration on loans does not affect riskiness but adversely affects franchise values.

Suggested Citation

  • Shaker Ahmed & Laura Baselga-Pascual & Timothy King, 2025. "How Do Stock Markets Value Bank Diversification? Evidence from the Eurozone," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Timothy King & Jonathan Williams (ed.), Corporate Governance in the Banking and Financial Sector, chapter 0, pages 37-60, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-83353-3_3
    DOI: 10.1007/978-3-031-83353-3_3
    as

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