Andreas Mattig

Starting in 2007 financial markets experienced a time of serious crisis that spread from the United States housing market and affected banks worldwide. In this article, we analyze the spreading of the crisis from Wall Street to Main Street in the specific context of the different European Markets and based on reactions of deposit holders. We show how elements of crisis affect Main Street and discuss the policy moderation of that transmission. This allows to collect evidence for the implication of the described moderation in an integrated financial market and the role of deposit insurances in financial turmoil.

Following a capability-based view of the firm, we argue that the inconsistent findings on the relationship between horizontal diversification and firm performance may result from a lacking focus of the literature on the role of the corporate management. Based on a sample of 164 European financial institutions we find a significant curvilinear relationship between diversification and market-based performance (Tobin's Q), but not for diversification and accounting-based performance (ROI). Our results indicate, however, that multibusiness firms benefit from a corporate management capability to foster cross-business collaboration and from a risk management capability. This research therefore contributes to a managerial perspective on corporate diversification.