The Benefits of Intrastate and Interstate Geographic Diversification in Banking
type: Dataset
description: We estimate the benefits of intrastate and interstate geographic diversification for bank risk and return, and assess whether such benefits could be shaped by differences in bank size and disparities in economic conditions within states or across U.S. states. For small banks, only intrastate diversification is beneficial in terms of risk-adjusted returns but for very large institutions both intrastate and intrastate expansions are rewarding. However, in all cases the relationship is hump-shaped for both intrastate and interstate diversification indicating limits for banks of all size. Moreover, while our results indicate that the average 'very large' bank has already reached its optimal diversification level, the average 'small bank' could still benefit in terms of risk-adjusted returns from further geographic diversification. Higher economic disparity as measured by the dispersion in unemployment rates either across counties or states impacts the benefits of diversification. At initially low levels of diversification, moving to other markets with dissimilar economic conditions lowers the added value of diversification but it becomes more beneficial at higher diversification levels.
issued: 2026-05-06T07:01:08.561447
language: en
modified: 2026-05-06T07:01:08.561451
contact point: Organization
  fn: CCSD
keyword: bank-holding-company
keyword: bank-risk-and-return
keyword: geographic-diversification
keyword: infoeu-reposemanticspreprint
keyword: intrastate-and-interstate-disparities-in-economic-activity
keyword: preprints-working-papers-
keyword: shsecohumanities-and-social-scienceseconomics-and-finance
landing page: https://unilim.hal.science/hal-00950504

The Benefits of Intrastate and Interstate Geographic Diversification in Banking
type: Distribution
format: HTML
issued: 2026-05-06T07:01:08.564175
modified: 2026-05-06T07:01:08.546837
access URL: https://unilim.hal.science/hal-00950504

test_moissonnage_selune
type: Agent