This study investigates the effects of branch network expansion and geographical strategies on the cost efficiency of Italian cooperative banks between 2006 and 2013. Results indicate that, except for banks with a more diversified product offering, expansion has a negative impact on efficiency, which is exacerbated by increased distance between the headquarters and branches. Any positive effect due to a larger bank size is neutralized by the branch expansion. Efficient local banks and a larger credit availability boost the local economy, while a bank structural change by a branch expansion generates a negative effect in terms of local economic development.

We use panel data from 52 Italian Bank Holding Companies (BHCs) over the period of 2006 to 2011 to test how revenue diversification affects bank performance. Unlike studies of diversification that focus on its effect on equity and debt values and risk return portfolio strategies, we investigate how various nontraditional revenues mix impact performance. Diversification increases bank profitability on a risk-adjusted basis; however, no statistical effect in terms of risk is observed. We also argue that the results of previous research on the impact of diversification may differ because of its interaction with asset size and degree of capitalization. Our models are robust to different measures of performance, endogeneity tests and the effect of the financial crisis. The results have strategic implications for the consequences of bank performance and stability that are relevant to bank managers, regulators and supervisors.

Today’s organizations face unprecedented challenges related to societal and environmental matters. The long-term trends related to climate change are expected to generate instability in the credit market and negatively affect organizational performance. Organizations can mitigate these issues and better grasp different trends by having a diverse board (i.e., board members of different genders, ages, qualifications and nationalities). However, that same diversity may also create conflicts and worsen strategic decision-making. Grounded on stakeholder theory, this study investigates the impact of board diversity on bank performance, assuming that board diversity also shapes environmental, social, and governance (ESG) engagement, which is linked to financial performance. Our data comprises a sample of public commercial banks located in OECD countries. The results suggest that board diversity (as a bundle of different traits and characteristics) contributes positively to performance. However, the impact measured by the means of accounting-based and market-based performance measures differs. In addition, we found that ESG investments adversely affect profitability ratios, but a more diverse board mitigates the possible detrimental effects of ESG expenses on company returns. By helping to illuminate the short- and long-term effects of board diversity on bank performance, the results hold value for regulators, policymakers, supervisory authorities, banks, and managers.