Lower Levels Of Diversification Research Articles

Loan and financing diversification and bank stability in dual-banking systems

Our investigation of 46 conventional and 22 Islamic banks from the Gulf Cooperation Council (GCC) countries during 2008–2021 reveals that sectoral diversification effects on stability are nonlinear and different for the two bank types. While Islamic banks’ stability is worsened only by moderate levels of diversification, conventional banks’ stability is enhanced by high levels and impaired by low levels of diversification. Furthermore, diversification acted as a stabilizer during the global financial crisis but exacerbated the adverse effects of the Covid-19 pandemic. Although regulators usually call for bank diversification, our results imply that it can be a double-edged sword.

Dynamics of Income Diversification, Profitability, and Risk: Analysis of Public and Private Sector Banks in India

“Do not put all eggs in one basket.” This risk management principle applies to every other industry whether it be manufacturing or banking. Interest income is believed to be a bank's primary source of income. Banks diversify their operations to generate non-interest income and lower their total risk exposure. Applying panel-data regression, the study analyzes and compares the intensity of diversification of income sources between public and private sector banks in India, using secondary data for Indian financial years 2012-13 to 2020-21. It utilizes RAROA and Z-Score to examine the impact of income diversification on profitability and risk, respectively. It discovered that private banks are more diversified than public banks. With low levels of diversification, public banks had a positive impact on profitability and risk. This is evident from research that banks leverage income diversification as a tool to fight COVID-19 backed slowdown.

SAIPO-TAIPO and Genetic Algorithms for Investment Portfolios

The classic model of Markowitz for designing investment portfolios is an optimization problem with two objectives: maximize returns and minimize risk. Various alternatives and improvements have been proposed by different authors, who have contributed to the theory of portfolio selection. One of the most important contributions is the Sharpe Ratio, which allows comparison of the expected return of portfolios. Another important concept for investors is diversification, measured through the average correlation. In this measure, a high correlation indicates a low level of diversification, while a low correlation represents a high degree of diversification. In this work, three algorithms developed to solve the portfolio problem are presented. These algorithms used the Sharpe Ratio as the main metric to solve the problem of the aforementioned two objectives into only one objective: maximization of the Sharpe Ratio. The first, GENPO, used a Genetic Algorithm (GA). In contrast, the second and third algorithms, SAIPO and TAIPO used Simulated Annealing and Threshold Accepting algorithms, respectively. We tested these algorithms using datasets taken from the Mexican Stock Exchange. The findings were compared with other mathematical models of related works, and obtained the best results with the proposed algorithms.

The Level of Diversification on the Firms of the Iberian Market

It is a fact that a company’s durability may depend on its capacity to readjust to a world in continuous change. Diversification strategies should be a security device, reduce the risk, and at the same time, search for possible profitable opportunities. Therefore, when a diversified firm follows one of its business sections and realizes that the performance is worse than foreseen, this negative impact may be diminished by other segments with better performance. Contextually, the current study aims to determine a correlation between value and corporate diversification in the Iberian market. We use Tobin’s Q as the measure for value and the Herfindahl Index to measure diversification. In addition to the study of correlation, this paper also analyses the level of diversification for the firms that integrate the Iberian market and if their market value is above or below their book value. Using these metrics, we found a negative correlation between value and diversification in the Iberian Market. In our sample, we also found that highly diversified firms performed worse than focused firms on average. In the Portuguese sample, we were able to determine the level of diversification that maximizes the Tobin’s Q of a firm. According to Tobin's Q, our sample was characterized by a low level of diversification in general and that the companies were slightly overvalued.

Impact of COVID-19 on International Trade: Lessons for African LDCs

The COVID-19 pandemic has highlighted the lack of provisions in existing trade agreements to tackle such a crisis. Advanced and emerging countries, fearing issues of food and national security, have responded with knee-jerk policy measures to promote national production, reshoring of manufacturing, and to reduce dependence on trade. This will adversely affect the least-developed countries (LDCs) in Africa due to their high dependence on trade and low levels of diversification. Proposals have been made by various countries to the WTO to ensure the free flow of trade in essential goods and maintain supply chain connectivity. Hence, there is scope for African LDCs to sign future plurilateral agreements with existing, economically- advanced trade partners, to ensure that no new protectionist measures will be erected against the LDCs during crisis periods, while also promoting production at home. Further trade cooperation between LDCs in Africa within the AfCFTA framework can provide an opportunity to promote resilient regional trade relations through construction of disaster-proof supply chains of essential, and non-essential goods and services. Maintaining food security in these African LDCs is of utmost importance and can be an effective bargain in future trade agreements.

Georgia in the World Merchandise Trade: Main Trends and Problems of Development

Abstract Foreign trade is the main factor in the country's integration into the world economic system. It promotes the socio-economic development of states, especially developing countries. After the restoration of state independence, Georgia actively cooperates with different countries within the framework of bilateral and multilateral agreements. Its foreign trade activity is based on a high level of openness of the economy and liberal policy, features of the market economy and new vectors of development. Georgia has been a member of the World Trade Organization since 2000 and has one of the most liberal and competitive trade regimes across the world. Georgia's foreign trade turnover has a cyclical growth pattern with a combination of periods of its fall. Over the entire post-Soviet period, the country has a negative trade balance and a high dependence on imports. Export characterizes a high degree of concentration of geographical structure and low level of diversification. The article analyzes the current state of Georgia's foreign trade, shows the main indicators of the country's foreign trade for the period of 1994-2014, and examines the main trends in its development and the importance of export diversification to improve the efficiency of foreign trade.

Prospects of the EAEU Single Services Market

The paper analyzes the formation of a single services market in the Eurasian Economic union. Free trade of services plays an important role in the Eurasian economic integration. It contributes to the development of cross-border trade and business ties of the EAEU partners. The impact of services sector on reciprocal and international trade of member-states is expected to grow further in future as a result of deepening of economic integration and expanding of external economic relations of the EAEU.The paper reviews economic and institutional factors, which may hinder integration of member-states services markets. Among economic impediments the author highlights such factors as a low volume of intraregional trade in services, member-states' orientation on third countries in trade in services, a low level of diversification of brunch structures of their trade in services, a low share of innovative and business services in reciprocal trade, as well as monocentric system of trade in services (with one dominant state in the Union as a main supplier and consumer of services). As an institutional factor the author regards a lack of supranational mechanism of liberalization of reciprocal trade in services. Eurasian economic commission elaborates the plans of liberalization of trade in services. However the power of Commission to influence the decision making process in this sphere is limited by the member-states. The regulation of a single services market belongs to the authority of the Supreme Eurasian Economic Council and is beyond of the scope of direct competences of the Commission.

DIVERSIFICATION OF ALCOHOL PRODUCTS CONSUMPTION IN EUROPE

The paper presents the results of research on the differentiation of alcohol consumption in European countries in the years 2000-2013. In the study period, the trend of consumption of alcoholic products from the growing to the decreasing one was changed. This change was in the years 2007-2008 and is most likely related to the financial crisis that has just started. The consumption of alcoholic beverages in Europe is characterized by low levels of diversification over the period considered, which means that, despite the aforementioned trend change, it was quite stable. The differentiation of consumption levels of alcoholic beverages in individual countries was also assessed and classified in terms of their level.

Diversification of agricultural crops to adapt to climate change: A case study of Gujarat

Climate change is a global environmental challenge that is threatening sustainable development around the world. This paper looks at diversification as a key factor in reducing risk and means of coping with an uncertain climate. The time series data on area, production and productivity of major crops of Gujarat State were collected from the website www.agri.gujarat.gov.in for the period from 2001–02 to 2014–15 and analyzed using different statistical tools like-CGR, Instability Index, Diversification Index, etc. This paper revealed that acreage under major food-gains like wheat and rice, most of cash crops and all the horticultural crops were increased whereas acreage under all coarse cereals, pulses, oilseeds was declined, which was mainly due to increase in rainfall (in cotton growing area), irrigation facility, high prices and introduction of Bt cotton variety. These all reasons were related to climactic factors directly or indirectly. High growth and low instability i.e. in case of major cereals, cash crops and horticultural crops shows risk security of farmers in terms of economic returns as well as in terms of climactic adaptation. Amongst the different regions, North Gujarat reported the highest level of crop diversification followed by Middle Gujarat, South Gujarat and Saurashtra-Kutch. The pre dominant crop like cotton and groundnut in Saurashtra-Kutch was responsible for low level of diversification in the region. Overall, Gujarat state reported a moderately high level of crop diversification but it was slightly declined during last decade, which secured farmers against climate risk.

The link between trade openness, export diversification, institutions and output volatility in transition countries

This paper investigates the role of trade openness, export diversification and institutions as potential predictors of output volatility in 25 transition economies in the period 1996–2010. Our results suggest that diversification may not attenuate the output volatility effects of openness for transition countries already at medium or higher levels of diversification, but nonetheless may have this effect at lower levels of diversification. Further, while inflation volatility and conflict both increase output volatility, better political institutions contribute to output stability in transition countries. In addition, we find that differences between diversification at the export margins are not just conceptual, but also substantive: the effect of openness is conditional on export diversification at the intensive margin but not at the extensive margin. These findings are robust to different assumptions regarding the potential endogeneity of openness and institutional quality as well as to alternative proxies for institutions and output volatility and additional control variables.

Exploring the effect of diversification strategy on R&D intensity using quantile regression: evidence from France

ABSTRACTThis study examines the relationship between firm diversification strategy and R&D intensity for a sample of large French companies between 2008 and 2012. Applying quantile regression, we provide evidence that the choice of diversification affects R&D intensity in a differentiated way. The results indicate that a low level of diversification (below the twentieth quantile) has no significant impact on R&D intensity. Conversely, a moderate or high level of diversification has a negative and significant impact on R&D intensity. These findings suggest that R&D intensity seems to be significantly higher in related-business firms than in unrelated-business firms.

Livelihood Diversification in Rural Laos

Livelihoods in rural southern Laos are highly diverse, comprising a wide range of different productive activities. In this paper motivations for diversification within livelihood strategies in rural communities in southern Laos are investigated through theories of distress-induced risk spreading in response to crises and progressive success and wealth. Results indicate that livelihood diversification at the household level is associated with higher wealth status and ownership of a range of assets as part of a progressive, accumulation livelihood strategy for those with fewer constraints. Diversification strategies across all socioeconomic groups commonly include a combination of agricultural and non-agricultural activities as well as migrant remittances, however, the types of activities undertaken are dependent on wealth. The increased asset status of households extends to enabling higher income-generating migration opportunities and may facilitate transition into both non-agricultural employment, as well as into a wider variety of agricultural employment activities. This further strengthens livelihoods through the mutually reinforcing complementarities across livelihood activities and reducing the risks associated with each. But this has the effect of leaving the poor, with lower levels of diversification, at most risk to natural or economic disasters or other shocks. Results have implications for development policy for rural southern Laos, highlighting the importance of recognizing the positive aspects of livelihood diversification for rural poverty reduction. Broadened policy mechanisms which support and encourage diversification and mobility at the household level are needed. Likewise, pro-poor development initiatives that focus on increasing the diversity of assets (rather than the quantity of any one single asset) of the poor are more likely to be successful in supporting livelihood diversification and reducing vulnerability.

Beyond the Resource Curse? Canada and the Case for Bilateral Trade Agreements

This article examines the case for Canadian trade bilateralism through the lens of the resource curse. As a favoured federal policy option for economic diversification, Canada’s bilateral trade agreements have underperformed even as energy exports continue to rise. Given Canada’s structural relationship to the global economy and the very low levels of diversification created by preferential trade agreements outside the NAFTA arrangement, there are few strong arguments for an intensification of Canadian bilateralism. However, the political reasons for bilateral trade agreements are better than the economic ones. Even though Canada's pattern of bilateral trade agreements to date does not suggest a coordinated attempt to unlock a specific region or strategic set of trading partners, a political stake in the current system pays dividends both in terms of diplomatic legitimacy as well as in the development of new templates for future agreements.

A diversificação da estrutura produtiva no Brasil: observações preliminares

RESUMO Este trabalho tem como objetivo examinar a extensão da diversificação das operações produtivas no Brasil, de 2006 a 2010. Em 2007, o IBGE passou a adotar a versão 2.0 da CNAE, divulgando novas informações estatísticas de unidades ativas, em especial referentes às variáveis derivadas "empresa não diversificada" e "empresa diversificada". Conclui-se que a maioria das empresas do país apresenta um baixo nível de diversificação; a maioria das empresas brasileiras é "especializada" em suas atividades econômicas básicas (unidade local única). Das empresas que operam com "mais de uma unidade local", quase dois terços delas são classificados como "empresas não diversificadas", em 2010. No que tange às "empresas diversificadas", observa-se que, quanto maior o tamanho, maior tem sido a diversificação, mas verifica-se, de modo geral, que as empresas de todos os tamanhos têm se preocupado em expandir mais por meio da "diversificação por atividade e mista" e menos por intermédio da "diversificação espacial". Considerando a diversificação por setor de atividade econômica, as empresas da construção e da indústria de transformação atingiram níveis mais elevados de diversificação em 2010. De modo geral, diversos setores mostram características distintas com relação ao tipo de diversificação e ao porte das empresas.

Rural Non Farm Employment in Assam: Trends and Issues

This study explores the rural labour market in Assam. The Work Participation Rates (WPR) for males has increased during the period 1993-94 to 2009-10, whereas the same for females has been fluctuating around a lower level of 15 to 20 per cent. Thus, unemployment rates for females have been higher than males. A sector-wise distribution of workers shows that the proportion of males employed in the farm sector has been declining in favour of the Non-Farm Sector (NFS), while the females are more concentrated in the farm sector. Thus, females stand in a more disadvantageous situation in the rural labour market as indicated by their low WPR, higher unemployment rates and low level of diversification into NFS. However, gender equality is necessary for growth. This is more so with regard to education and employment. India has introduced the concept of inclusive growth in the Eleventh Five Year Plan. Inclusive growth ensures opportunities for all sections of the population, with a special emphasis on the poor, particularly women and young people, who are most likely to be marginalised. A rapidly growing population in India has not only increased the size of the rural labour force but has also led to fragmentation of land holdings. Thus, this sector alone cannot create additional employment opportunities, even in high growth agriculture states of India. This has led to the growth of a vibrant non-farm sector. The study comes up with the suggestion that the NFS, with its greater potential of employment generation, can not only solve the unemployment problem, but can also lead to the increased access of women to resources and employment opportunities.

Genetic diversity revealed by EST-SSR markers in carob tree (Ceratonia siliqua L.)

Carob is a caesalpinoid tree species widespread in the Mediterranean. In this paper, carob EST-SSR (Expressed Sequence Tags-Simple Sequence Repeat) markers were used to assess the level of genetic diversity among 71 cultivars and accessions collected in three Mediterranean countries (Italy, Malta and Spain). Starting from 20 microsatellite loci, we identified a set of 9 polymorphic EST-SSRs, with a number of alleles per locus ranging from 2 to 7, and a number of genotypes from 3 to 13. The nine polymorphic EST-SSRs discriminated most of the analyzed genotypes with the exceptions of some cultivated clones having similar phenotypic features and probably belonging to cultivar-populations, and clarified some cases of homonymy.A neighbor joining dendrogram generated three main clusters which did not show a correlation with the distribution areas of the analyzed genotypes. A Bayesian analysis evidenced a high degree of admixture among the gene pools from the three countries. The low level of diversification among geographical areas reveals that the asexual propagation of selected clones played a major role in the diffusion of the species in the western Mediterranean. The work described in this paper represents the first report of carob genotyping achieved through microsatellite markers.

Rural Labour Market in Assam: Trends and Status of Employment

Based on National Sample Survey data for 1993-94,1999-00,2004-05 and 2009-10, this paper explores the situation of the rural labour market in Assam. While the Work Participation Rates (WPR) for males Increased during the reference period, the same for females had been fluctuating around a lower level of 15 to 20 percent. Consequently, unemployment rates for females had been higher than males. A sector wise distribution of workers shows that the proportion of males employed in the farm sector had been declining in favour of the Non-Farm Sector (NFS), while the females were heavily tagged with the farm sector, leading to a lower degree of diversification into NFS. The employment growth rates for females suffered a serious setback during the period. The problem of casualisation is more acute for rural females than their male counterparts. Females stand in the most disadvantageous situation in the rural labour market as indicated by their low WPR, higher unemployment rates, lower employment growth, low level of diversification into NFS and higher casualisation Index.

International expansion and firm performance in emerging market: evidence from China

PurposeThe purpose of this paper is to investigate the relationship between international expansion and firm performance in an emerging market.Design/methodology/approachThe paper firstly explores the relationship between internationalization and firm performance, then investigates the roles of diversification, and examines how diversification moderates the relationship between internationalization and firm performance. For this purpose, panel data on 318 Chinese listed manufacturing firms during the period 1999‐2008 were utilized. Three groups of samples of high, medium and low levels of diversified manufacturing firms were obtained. Statistical techniques of fixed‐effects panel data model yielded an interesting pattern of findings. On the basis of these results, the paper then discusses the implications for the international expansion of Chinese firms.FindingsAt high and low levels of internationalization, internationalization is negatively associated with firm performance, but at medium levels of internationalization, greater internationalization is accompanied by higher performance. Product diversification negatively moderates the relationship between internationalization and performance. As product diversification increases, the relationship between internationalization and performance changes from a horizontal S‐curve in firms with low levels of diversification to a U‐curve in moderately diversified firms and eventually to an equilibrium level in highly diversified firms. The initial stage of the horizontal S‐curve of internationalization and performance declines markedly in Chinese manufacturing firms as a whole, therefore it is by no means easy for Chinese firms to undertake internationalization.Research limitations/implicationsThese findings do suggest that managers need to take a long‐term view of internationalization and make a commitment to internationalization.Originality/valueThis is the first paper of its kind to empirically validate the relationship between internationalization, firm performance and diversification in China. It is intended to make a contribution to theoretical research on international business in an emerging market.

Diversification in the venture capital industry: leveraging knowledge under uncertainty

AbstractThis study contributes to the research on the effect of diversification on performance under conditions of uncertainty. More specifically, we examine diversification in the context of venture capital firms. Drawing on the knowledge and organizational learning literature, we hypothesize that firms benefit from either low levels of diversification because of efficiencies in processing knowledge or high levels of diversification because of access to broad information that facilitates solving complex problems and the ability to direct a portfolio company down different trajectories. Consistent with our hypotheses, we find a U‐shaped relationship. Firms benefit from either low or high levels of diversification; moderate levels yield the poorest results. When uncertainty is highest (i.e., early stage investing, no coinvestors), the effects are most pronounced. Copyright © 2011 John Wiley & Sons, Ltd.

Impact of Diversification Strategies on Performance of Malaysian Public Listed Companies

This study discusses the theoretical issues on diversification, corporate performance and the relationship between these two. It studies 91 listed firms in the Main Board of Bursa Malaysia (Trading/Services ranking) for determining the diversification-performance relationship. Generally, the main objective of this research is to find out if different levels of diversification lead to different levels of corporate performance or not? Besides, the study looks for the effect of economic situation on the diversification-performance relationship. The time period of the study was chosen from 1997 to 2010, including the 1997-1998 Asian financial crisis and the 2007-2008 Global financial crisis. Two methods were used by the researcher for analyzing the data and testing the hypotheses. Non Parametric Test (Kruskal_Wallis) and Multiple Regression are these two methods. The outcomes show inconsistency among the results of different years of the study. For some years the relationship between diversification and performance is significant and for some years it is not. This means the results of the study were affected by the time period of the study. On the other hand the result of the research shows higher economic performance among the firms which follow lower levels of diversification (i.e. Single and Dominant levels of diversification), this is different from the result of some earlier researchers like Rumelt (1974) and Bettis (1981), etc. which concluded that Related level of diversification leads firms to be more profitable in comparison with firms pursuing Single and Dominant levels of diversification. However the results were similar to the results of some researchers like Grinyer et al. (1980).