Diversification at Financial Institutions and Systemic Crises

W.B. Wagner

Research output: Working paperDiscussion paperOther research output

1187 Downloads (Pure)


We show that the diversification of risks at financial institutions has unwelcome effects by increasing the likelihood of systems crises.As a result, complete diversification is not warranted adn the optimal degree of diversification is arbitrarily low.We also identify externalities that cause financial institutions to diversify beyond diversification may thus have reduced welfare.
Original languageEnglish
Place of PublicationTilburg
Number of pages40
Publication statusPublished - 2006

Publication series

NameCentER Discussion Paper


  • diversification
  • financial consolidation
  • conglomeration
  • securitization
  • system risk

Fingerprint Dive into the research topics of 'Diversification at Financial Institutions and Systemic Crises'. Together they form a unique fingerprint.

Cite this