ISSN 2167-0439
International Journal of Management and Business Studies ISSN 2167-0439 Vol. 8 (2), pp. 001-020, February, 2018. © International Scholars Journals
Full Length Research Paper
Bank international diversification on home bias, profitability and risk: Evidence from emerging and industrial countries
Shu Ling Lin
Department of Business Management, National Taipei University of Technology, Taiwan. E-mail: [email protected], [email protected]. Tel: +886-2-2771-2171. Ext. 3426. Fax: +886-2-2776-3964.
Accepted 07 October, 2017
Abstract
In the study of the effects of international diversification, many researches focused on the benefits of industrial countries. This study aimed to further this work by seeking to determine whether a consolidated group of international banks with extensive global exposures would be able to diversify away from firm-specific risks for both emerging and industrial countries. This paper examined the effects of international diversification in banking of 195 consolidated groups from six emerging and nine industrial countries from 2001 to 2006, using the generalized method of moments. The results showed that the risk-adjusted profitability of eight countries was rising significantly, and the systematic risks of the six countries were decreasing. However, home bias phenomenon was notably indicated. The findings of this study contributed to the international diversification assessment.
Key words: International diversification, home bias, risk-adjusted profitability, systematic risk, consolidated group of international banks.