This study examines structural shifts in the market for bank control resulting from the court decision of Northeast Bancorp, Inc., et al. v. Board of Governors (1985), and analyze its impact on stock prices and risk incentives in affected banks. The outcome of the case reaffirmed the...

We study empirically the effect of focus (specialization) vs. diversification on the return and the risk of banks using data from 105 Italian banks over the period 1993-1999. Specifically, we analyze the tradeoffs between (loan portfolio) focus and diversification using a unique data set that is...