Title
Product and Geographic Market Diversification in U.S. Banking
Document Type
Article
Publication Date
12-7-2020
Publication Title
Finance Research Letters
Volume
42
First page number:
1
Last page number:
6
Abstract
Prior literature either estimates economies of product diversification or evaluates the effects of market expansion on bank performance, but few studies look at the intersection of product and geographic diversification. We examine if the market expansion opportunities resulting from deregulation helped improve diversification/scope economies exhibited by banks. We leverage spatiotemporal variation in the implementation of deregulation laws across states to identify this relationship using a difference-in-differences framework. We find that the inter/intrastate deregulation accounts for a modest but statistically significant decrease in diversification diseconomies, and these gains were long-lasting. The findings suggest that geographic and product diversification are complementary.
Keywords
Banks; Deregulation; Market diversification; Product diversification; Scope economies
Disciplines
Finance and Financial Management
Language
English
Repository Citation
Zhang, J.,
Hartarska, V.,
Malikov, E.
(2020).
Product and Geographic Market Diversification in U.S. Banking.
Finance Research Letters, 42
1-6.
http://dx.doi.org/10.1016/j.frl.2020.101881