What Is Bank Diversification?

Diversification theory means that banks raise funds not only through debt management, but also through asset management. In the late 1970s, market interest rates fluctuated violently, and it was difficult for a single debt management or asset management to cope with this situation. The imbalance in the short-term and long-term loan structure of banks was very serious. At the same time, countries around the world have begun to gradually relax the control of deposit interest rates, providing conditions for banks to compete and start new businesses. ^[1]