Geographic Income Diversification of Large European Banks: Better or Worse?

47 Pages Posted: 12 Apr 2021 Last revised: 12 Aug 2022

See all articles by Caner Gerek

Caner Gerek

Kirklareli University

Ahmet M. Tuncez

University of Michigan at Dearborn - College of Business

Date Written: August 11, 2022

Abstract

This study examines the impact of geographic income diversification of large European banks on performance by using unique hand-collected European banking data. By dividing the total operating income into three regions as home country, the rest of Europe and the rest of the world, we find evidence that geographic income diversification reduces bank performance. Moreover, we separately analyze the net effects of shifting operations from home country to the rest of Europe and the rest of the world income and find that they reduce the bank performance except for the banks that are already more concentrated in these regions. We also show that our results hold when we analyze with only two regions (domestic and foreign) and control the effect of board nationality diversity.

Keywords: Geographic income diversification, European banking, bank performance, board diversity

JEL Classification: G21, G34

Suggested Citation

Gerek, Caner and Tuncez, Ahmet M., Geographic Income Diversification of Large European Banks: Better or Worse? (August 11, 2022). Available at SSRN: https://ssrn.com/abstract=3824041 or http://dx.doi.org/10.2139/ssrn.3824041

Caner Gerek

Kirklareli University ( email )

Kofcaz yolu üzeri ana kampüs
İktisadi ve İdari Bilimler Fakültesi
Kirklareli, Kirklareli
Turkey

Ahmet M. Tuncez (Contact Author)

University of Michigan at Dearborn - College of Business ( email )

Fairlane Center South
19000 Hubbard Drive
Dearborn, MI 48126-2638
United States

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