01908cas a2200265 a 4500 AALejournalIMF018372 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484352755 1018-5941 BD-DhAAL BD-DhAAL Di Vittorio, Fabio. On Bank Consolidation in a Currency Union / Fabio Di Vittorio, Delong Li, Hanlei Yun. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper focuses on the impact of diversification on bank performance and how consolidation through mergers and acquisitions (M and A) affects the banking sector's stability in the Eastern Caribbean Currency Union (ECCU). The paper finds that a lower level of loan portfolio diversification explains higher non-performing loans and earnings volatility of indigenous banks, as compared to foreign competitors in the ECCU. We then simulate bank mergers both within and across ECCU countries by combining individual banks' balance sheets. The simulation shows that a typical indigenous bank could better diversify against its idiosyncratic risk by merging with other banks across the border. In addition, we point out that M and A, leading to a more asymmetric banking sector, may increase systemic risk. Mode of access: Internet Li, Delong. Yun, Hanlei. IMF Working Papers; Working Paper ; No. 2018/092 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/092/001.2018.issue-092-en.xml IMF e-Library