Geographic income diversification of large European banks: Better or worse?
研究发现大型欧洲银行的地理收入多元化会降低绩效并增加风险，除非银行高度集中于特定区域。
Abstract This study examines the impact of geographic income diversification of large European banks on performance and risk‐taking by using unique data. By dividing the total operating income into three regions as the home country, the rest of Europe and the rest of the world, we find evidence that geographic income diversification reduces bank performance and increases risk‐taking. Particularly, shifting operations from home countries to other European countries or the rest of the world reduces bank performance and enhances risk‐taking unless the bank is highly concentrated in these areas. We also identify contributing channels, including the “follow‐the‐customer” hypothesis, new subsidiaries and board diversity, to explain the adverse effect.