In my opinion, Diversification is not the only strategy, there are many others.

Bain and Company, mentioned five other strategies that Banks can use during financial crises to include: Accelerating strategic scenario planning, Liquidity Management, Capital Discipline, Optimizing efficiency, and Weaving a convincing story.

A few kinds of diversification may be harmful during the crises e.g. off-balance sheet activities, certain securities, etc.

More focus is on capital and liquidity management.

I would say that banks do banking. Nothing else. If there is profit invest in your business-banking. There are many products within banking. Blockchain is a big challenge for banks. With their existing correspondence banks web they can create the large blockchains and this in turn reduce the costs and commissions. This will enhance the world trade. Whether they are in blockchain or not they have to be careful at 3 risk factors. Maturity risk: money borrowed, and money lent should be in near maturity brackets. Interest rate risk: what you charge for your loans should be higher than what you pay for your depositors. That`s your profit. Currency risk: Your foreign currency assets should be equal you foreign currency liabilities. Any exposure to foreign currency risk must be minimized. If banks apply this approach, they float in any financial crises. Having said that, their collaterals from the loan customers should be easily converted to cash. I.e. tangible assets like homes, land, machinery, equipment something has value in the market, plus the reliability of the borrower which is the biggest collateral. During stormy waters tangible assets like property can not be easily converted to cash, however the banks can undercut the price and still cover its loan and interest. Also, matching the interest is important. I.e. the surplus money can be invested in foreign countries government bonds (with good rating). Over the years technology led us less physical banks but more virtual banks. Virtual banking is a good this that also reduces costs.

In my opinion, Banks increase the money flow in the market as there is a crisis and money flow is reduced in the market by lowering the rate of interest.

While diversifying income streams is a well-established practice for banks to navigate through financial crises, it's important to note that diversification alone may not be the sole solution. Financial institutions should adopt a multi-faceted approach to resilience. This includes stringent risk management, cost control, effective liquidity management, regulatory compliance, a customer-centric approach, innovation, capital adequacy, and, in some cases, strategic mergers or acquisitions. The choice of strategy should be tailored to the specific context of each crisis and the unique circumstances of the bank in question. It's about building a comprehensive strategy that not only protects against risks but also positions the bank to thrive in an ever-changing economic landscape

During financial crises, banks typically implement strategies such as liquidity management, capital preservation, risk assessment, and tighter lending standards. They may also seek government assistance, including bailouts and central bank support, to stabilize their operations and maintain public confidence.

Hi researchers,

Thanks so much for your priceless sharing. I am writing this to inform that your comments are continuously and carefully being reviewing with respects!

Newcomers are welcome to join the discussions!

Best wishes,

Roman