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State whether the claim is true or false. Supply a brief explanation for your answer Geographic...

State whether the claim is true or false. Supply a brief explanation for your answer

Geographic diversification always allows banks to increase earnings and diversify risk.

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Answer #1

Statement is true because geographic diversification allow banks to increase business and customer base it different areas which have different set of Rules, Industries, Agriculture, Trade etc. depending on the geography. This diversified customer based allow the banks to earn more profit from the customer providing services and selling products useful for the customers of any specific geography also the risk is diversified since banks has large customer based and spread in bigger area which reduce the risk of any geography specific risk since business is spread in multiple geography. for example natural disaster of political instability etc.

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