Does Bank Diversification Improve Output Growth? Evidence from the Recent Global Crisis

15 Pages Posted: 2 Sep 2016

See all articles by Ali Mirzaei

Ali Mirzaei

American University of Sharjah

Ali M. Kutan

Southern Illinois University at Edwardsville

Date Written: September 2016

Abstract

This study examines whether the diversity of activities conducted by the banking sector in the years approaching the recent global financial crisis alleviated the adverse impact of the crisis. Using data for 28 industries in 66 countries, we find that bank diversification has strengthened country resilience to the crisis, as measured by industry growth over the period 2008–2009. However, we find that while both bank‐based and market‐based economies have been affected negatively by the crisis, the contribution of bank diversification in mitigating the real impact of the crisis is pronounced only in bank‐based economies. Overall, our findings suggest that countries with significant bank diversification have also been the most resilient to the recent global crisis.

Suggested Citation

Mirzaei, Ali and Kutan, Ali M., Does Bank Diversification Improve Output Growth? Evidence from the Recent Global Crisis (September 2016). International Review of Finance, Vol. 16, Issue 3, pp. 467-481, 2016. Available at SSRN: https://ssrn.com/abstract=2833627 or http://dx.doi.org/10.1111/irfi.12078

Ali Mirzaei (Contact Author)

American University of Sharjah ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

Ali M. Kutan

Southern Illinois University at Edwardsville ( email )

Department of Economics and Finance AH-3141
Edwardsville, IL 62026-1102
United States
618-650-3473 (Phone)
618-650-3047 (Fax)

HOME PAGE: http://https://ideas.repec.org/e/pku30.html

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