Comparative advantages in banking and strategic specialization and diversification Report as inadecuate




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Abstract

Abstract

This paper shows how banks specialize in different activities when they start with different comparative advantages. The possibility of wrong specialization is shown in a Cournot game with convexities. Different resolution mechanisms are discussed. With risk averse financial intermediaries, excessive diversification is shown to be a problem. Financial innovation like credit derivatives and securitization can mitigate the problem and result in optimal specialization and diversification patterns.



Item Type: MPRA Paper -

Original Title: Comparative advantages in banking and strategic specialization and diversification-

English Title: Comparative Advantages in Banking and Strategic Specialization and Diversification-

Language: English-

Keywords: Comparative Advantage, Specialization, Diversification-

Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - GeneralG - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages-





Author: Mallick, Indrajit

Source: https://mpra.ub.uni-muenchen.de/32605/



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