Philippine universal bank\u27s degree of product and revenue diversification: Determinants and effects on financial performance

As a conventional wisdom, diversification is a firm\u27s strategy to gain higher profits and minimize exposure to risks. In this study, the degree of divestification of the universal banks operating locally will be analyzed in terms of their products and revenue, using the loan and deposit focus indices, and entropy measure of diversification, respectively. Using the random effects estimation technique, and as supported by the traditional banking portfolio theory, we take the universal banks\u27 financial accounts from the Bangko Sentral ng Pilipinas, and simulate the determinants and effects of diversification on profitability. Through this, we hypothesize that the traditional banking and portfolio theory supports the positive and significant relationship between divestification and profitability in the Philippine universal banking industry