/home/leansigm/public_html/components/com_easyblog/services<title> Are more specialized banks stable or unstable? </title>
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	<h1> Are more specialized banks stable or unstable? </h1>
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			<span class="post-date">Jun 13</span>

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				Posted by <a href="/forum/user/2264-archit-gupta">Archit  Gupta</a>				in <a href="/blog/categories/banking-financial-services-and-insurance">Banking ,Financial Services and Insurance</a>			</span>
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	<p>Research by Diamond (1984) assumes that diversification would eliminate the risk of shocks. Alternate theory (Winton, 1999) says that specialization would remove information barriers between borrowers and lenders and hence would mitigate default risks keeping banks stable. In a recent paper by Thornsten Beck, a finance professor at Cass Business School, took bank sectoral specialization and bank sectoral differentiation as measures. He concluded that banks with more specialization experience lower volatility of stock returns and lower systematic risk. Also, there is inverse relationship between sectoral differentiation and systematic risks. More research is required in this area.Read more at: <a href="https://blogs.worldbank.org/allaboutfinance/not-all-eggs-same-basket-role-sectoral-specialization-banking-system" target="_blank">https://blogs.worldbank.org/allaboutfinance/not-all-eggs-same-basket-role-sectoral-specialization-banking-system</a></p>
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		<a href="/blog/tags/diversification">
		<span itemprop="keywords">diversification</span>
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		<a href="/blog/tags/thornsten">
		<span itemprop="keywords">Thornsten</span>
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		<a href="/blog/tags/sectoral-specialization">
		<span itemprop="keywords">Sectoral specialization</span>
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		<a href="/blog/tags/sectoral-differentiation">
		<span itemprop="keywords">Sectoral differentiation</span>
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