What the study found
The review found that the effects of bank diversification on performance are heterogeneous and depend on context. The authors report that diversification in commercial banks can sometimes improve profitability and valuations, but in other settings it can increase earnings volatility and lower risk-adjusted performance.
Why the authors say this matters
The study suggests that bank managers can use these findings to align diversification strategies with changing economic conditions. The authors also conclude that policymakers may use the results to design regulations that adapt to macroeconomic fluctuations.
What the researchers tested
The researchers conducted a PRISMA 2020-based systematic literature review using Scopus data from 2006 to 2025. They also used bibliometric analysis with VOSviewer 1.6.20 and RStudio 4.4.3 to identify themes and citation patterns.
What worked and what didn't
The findings indicate that diversification can work in some contexts by improving profitability and valuations. However, the review also found cases where diversification was associated with higher earnings volatility and weaker risk-adjusted performance, and the impact of monetary policy was described as significant but mediated by broader macroeconomic factors.
What to keep in mind
The review covers commercial banks and is based on studies indexed in Scopus from 2006 to 2025. The abstract does not provide a single uniform effect, and it does not describe detailed study-level limitations beyond noting that results are context-dependent.
Key points
- Diversification in commercial banks has mixed effects on performance.
- The review found context-dependent links to profitability, valuations, earnings volatility, and risk-adjusted performance.
- Monetary policy was identified as important, but its effects were mediated by broader macroeconomic conditions.
- The study used a PRISMA 2020-based systematic review of Scopus literature from 2006 to 2025.
- Bibliometric tools were used to map themes and citation patterns.
Disclosure
- Research title:
- Bank diversification shows mixed effects on performance
- Authors:
- Ven Phuoc Luu, Duc Hong Thi Phan, Huy Quoc Bui
- Institutions:
- City of Knowledge, Ho Chi Minh University of Banking, RMIT University, Universiti Tunku Abdul Rahman, University of Economics Ho Chi Minh City, Vietnam National University Ho Chi Minh City
- Publication date:
- 2026-03-05
- DOI:
- 10.3390/jrfm19030189
- OpenAlex record:
- View
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