Lesson 6 Discussion Forum  :   Discussion assignments will be graded based upon the criteria and rubric specified in the Syllabus. 550 Words For this Discussion Question, complete the following. 1.  Review the two articles about bank failures and bank diversification  that are found below this. Economic history assures us that the health  of the banking industry is directly related to the health of the  economy. Moreover, recessions, when combined with banking crisis, will  result in longer and deeper recessions versus recessions that do occur  with a healthy banking industry.  2. Locate two JOURNAL  articles which discuss this topic further. You need to focus on the  Abstract, Introduction, Results, and Conclusion. For our purposes, you  are not expected to fully understand the Data and Methodology.   3. Summarize these journal articles. Please use your own words. No copy-and-paste. Cite your sources. Please post (in APA format) your article citation.  Reply to Post 1: 160 words and Reference Discussion on Bank’s failures and its diversification Over the last two decades, business cycle volatility has decreased in the US. For example, some analysts claimed that companies handle inventory better today than ever, or that advances in financial systems have helped smooth industry volatility. Some emphasized stronger economic policy. Banking changes were also drastic in this same era, contributing to the restructuring and convergence of massive, global banking institutions in a better-organized structure. The article (Strahan, 2006) points out that some regulatory reform driven by individual countries rendered it possible for banks to preserve their resources and income by gradually diversifying from local downturns. Both low state volatility rates and a decline in partnerships between the local market and the central banking sector is a net influence on the diversification in banks. Considering the less fragile state economies following these intergovernmental financial reforms, there are some signs that financial convergence – while certainly not the only piece of the puzzle – has been less unpredictable.             Another article (Walter, 2005) argues that a long-standing reason for bank collapses during the crisis is a contagion, which contributes to systemic bank failures and the collapse of one bank initially. This indicates why several losses in the crisis period were unintentional, which ensured that the banks remained stable and endured without contagion-induced falls. The response to the contagion was the central government’s deposit policy, bringing an end to defaults. Nevertheless, since the sequence of errors began in the early 1920s, well before contagion was evident, the underlying trigger must be contagion.             Now it seems like the bank sector has undergone a shake-out that was worsened during the crisis by the deteriorating economic conditions. Although the reality that incidents occurred almost syno ...

1. Lesson 6 Discussion Forum :
Discussion assignments will be graded based upon the criteria
and rubric specified in the Syllabus.
550 Words
For this Discussion Question, complete the following.
1. Review the two articles about bank failures and bank
diversification that are found below this. Economic history
assures us that the health of the banking industry is directly
related to the health of the economy. Moreover, recessions,
when combined with banking crisis, will result in longer and
deeper recessions versus recessions that do occur with a
healthy banking industry.
2. Locate two JOURNAL articles which discuss this topic
further. You need to focus on the Abstract, Introduction,
Results, and Conclusion. For our purposes, you are not
expected to fully understand the Data and Methodology.
3. Summarize these journal articles. Please use your own words.
No copy-and-paste. Cite your sources.
Please post (in APA format) your article citation.
Reply to Post 1: 160 words and Reference

2. Discussion on Bank’s failures and its diversification
Over the last two decades, business cycle volatility has
decreased in the US. For example, some analysts claimed that
companies handle inventory better today than ever, or that
advances in financial systems have helped smooth industry
volatility. Some emphasized stronger economic policy. Banking
changes were also drastic in this same era, contributing to the
restructuring and convergence of massive, global banking
institutions in a better-organized structure. The article (Strahan,
2006) points out that some regulatory reform driven by
individual countries rendered it possible for banks to preserve
their resources and income by gradually diversifying from local
downturns. Both low state volatility rates and a decline in
partnerships between the local market and the central banking
sector is a net influence on the diversification in banks.
Considering the less fragile state economies following these
intergovernmental financial reforms, there are some signs that
financial convergence – while certainly not the only piece of the
puzzle – has been less unpredictable.
Another article (Walter, 2005) argues that a long-
standing reason for bank collapses during the crisis is a
contagion, which contributes to systemic bank failures and the
collapse of one bank initially. This indicates why several losses
in the crisis period were unintentional, which ensured that the
banks remained stable and endured without contagion-induced
falls. The response to the contagion was the central
government’s deposit policy, bringing an end to defaults.
Nevertheless, since the sequence of errors began in the early
1920s, well before contagion was evident, the underlying
trigger must be contagion.
Now it seems like the bank sector has undergone a

3. shake-out that was worsened during the crisis by the
deteriorating economic conditions. Although the reality that
incidents occurred almost synonymous with the creation of the
FDIC at first glance, suggested that contagion may have been
effective, there are just as plausible more explanations for this
simultaneity. Of instance, the availability of deposit insurance
of deposits that did not represent bank danger undoubtedly
raised risky bank profitability and shielded such banks from
collapse. In addition, after deposit insurance was created, the
mechanism that guided the supervisors to close distressed banks
quickly eroded.
With data from the Asian banking sector, researchers
(Gunji, & Yuan, 2018) explored the correlation between
monetary policy credibility and banks' corporate diversification.
It was found out that the impact of monetary policy is enhanced
by bank diversification. They split the samples into developing
countries and less developed countries to investigate whether
the association between diversification and the impact of
monetary policy showed regional variations. They have viewed
China, India, Indonesia, Malaysia, the Philippines, Thailand,
and Vietnam as less established nations and have rendered
South Korea, Hong Kong, Taiwan, and Singapore industrialized
countries. In this analysis, researchers used banking data for
eleven Asian countries from 1995 to 2008 to analyze whether
diversification has an effect on the dissemination of monetary
policies. As in the case of the overall world, studies have
indicated that greater diversification decreases the influence of
restrictive monetary policies. They found that monetary policy
impacts more complex banks.
Others (Kim, Batten, & Ryu, 2020) also studied the
diversification effect of banks on the financial stability and
have noticed a substantially non-linear (i.e., inverted U-shaped)
relationship by utilizing a study of commercial banks that are
commercially located in OECD countries. The findings indicate

4. that modest diversification of banks improves bank stability, but
extreme diversification has a negative impact. They also
considered the temporal aspect of this interaction. For example,
before the financial crisis, diversification of the banking sector
minimized the variance in bank stability but intensified their
variance during the global economic downturn. And in times of
recession, the banks are well-positioned to center their
operations and activities on the conventional broker roles (i.e.,
deposits and loans). In addition, the findings indicate that most
global regulators to reduce bank risk promote diversification;
diversification of banking may aggravate financial volatility in
banking or enhance the risk of financial market failure in the
event of unusual events, such as financial crises.
Replt to Post 2: 150 Words and References
Performance and risks in current economics
According to Moudud-Ul-Huq, Zheng, Gupta, Hossain & Biswas
(2020), the quadratic effect can be measured for the diversion of
a bank, financial crisis all over the world, their size, and
performances and behavior of the risk management. For
measuring the effects of those things the moments for the
generalize things can be chosen, and the panel set of unbalanced
data is used for the measurement degree of some large number
of samples for the assessment purpose. Some key results are
there for that current economic purpose. The son-performing
ratio of the loans is increased and that can turn banks into
unstable and underperforming. Diversification of banks can be
beneficial and that results in a heterogeneous one, which can
make sure about the theory of the portfolio diversifications.
Small banks can have some bigger portfolio and which is

5. greater than the large banks. Large banks in various other
countries can be benefited from the diversification of the
income than the banks which are small in size. Some studies are
going on there which can tell us that the economics which is
emerging can use the financial crisis to make the portfolio of
the diversification. It is helpful for risk control and the
performance improvement of the bank. The global crisis of
financial matters can cause various changes in the field of
finance, banking, and many more. Liberalization and the
competition between the market values urge to shift their main
and basic focus from the minimal businesses. Developed
countries are also adopting this technique for the diversification
of bank, income implication, and in the performance risk.
Income from the diversification can enhance some other types
of risks also, those are, maker risk, credit risk, liquid risk, etc.
diversification of income can also make some profits regarding
the banking purpose.
Financial capacity of local things and making value from bank
failure
As per Rajan & Ramcharan (2016), the differences used for the
regulations for the identification, one can find the financial
intermediation which can reduce the rates of recovery for bank
failure. Local land prices can be depressed and it can also
associate with other distressing conditions for the banks that are
situated nearby. Fire bank tools can be used for the lower
economic places for reducing the assets of banks which works
are failed. The failure of the banks is contagious and the assets
of those financial things can be used for recovering the
available market for the intermediate things. 4 channels are
there which can detect the failure and decline process of the
asset value. Value decline processes which are transmission
related can be declined exclusively and mutually. For the
banking failures, some more regulatory work assets can be used
for the recovery of those failures. State line bank branching can

6. be reduced as there are more transportation costs and for those,
the combined process of a transaction must be implemented for
identifying the reason behind the failure and tools are set for
making some recovery on it. Various studies are there regarding
these recovery process and the identification process. These are
all related to the failed banking and the new transaction process
and also the process for which can cause the diversifications.
The diversification is taken place for recovering such things,
and various investment areas are made for backup and safe
investment of money which can not be failed and also can not
be overcome through that. Local banks are capable of doing
these are they are small banks and can handle all the matters of
it. Recognition sections are there who help in doing these things
and can be very helpful in resolving the problem and also
overcome form the failure.