Academic research reflects these ch

Academic research reflects these changes from a market perspective. Earlier studies predominantly claim that bank diversificationprovides economic benefits. For example, Baele, De Jonghe, and Vander Vennet (2007) argue that bank diversification reduces oper￾ating costs (especially fixed costs) and improves loan origination and credit risk management owing to economies of scope and in￾formation. Kroszner and Rajan (1994), Puri (1994, 1996), Gande, Puri, Saunders, and Walter (1997), and Hebb and Fraser (2002) alsoclaim that bank diversification is beneficial, citing synergistic effects. Kwan (1998) and Cornett, Ors, and Tehranian (2002) argue thatcommercial banks can reduce risk through diversification because of the low correlation of returns among securities and bank sub￾sidiaries. Although arguments supporting bank diversification dominated before the global financial crisis, the aftermath of this crisisnecessitated a reassessment of the practice.