Lesson 6 Discussion Forum : Discussion assignments will be graded based upon the criteria and rubric specified in the Syllabus. 550 WordsFor this Discussion Question, complete the following.1. Review the two articles about bank failures and bank diversification that are found below this. Economic history assures us that the health of the banking industry is directly related to the health of the economy. Moreover, recessions, when combined with banking crisis, will result in longer and deeper recessions versus recessions that do occur with a healthy banking industry.2. Locate two JOURNAL articles which discuss this topic further. You need to focus on the Abstract, Introduction, Results, and Conclusion. For our purposes, you are not expected to fully understand the Data and Methodology. 3. Summarize these journal articles. Please use your own words. No copy-and-paste. Cite your sources.Please post (in APA format) your article citation.Reply to Post 1: 160 words and ReferenceDiscussion on Bank’s failures and its diversificationOver the last two decades, business cycle volatility has decreased in the US. For example, some analysts claimed that companies handle inventory better today than ever, or that advances in financial systems have helped smooth industry volatility. Some emphasized stronger economic policy. Banking changes were also drastic in this same era, contributing to the restructuring and convergence of massive, global banking institutions in a better-organized structure. The article (Strahan, 2006) points out that some regulatory reform driven by individual countries rendered it possible for banks to preserve their resources and income by gradually diversifying from local downturns. Both low state volatility rates and a decline in partnerships between the local market and the central banking sector is a net influence on the diversification in banks. Considering the less fragile state economies following these intergovernmental financial reforms, there are some signs that financial convergence – while certainly not the only piece of the puzzle – has been less unpredictable. Another article (Walter, 2005) argues that a long-standing reason for bank collapses during the crisis is a contagion, which contributes to systemic bank failures and the collapse of one bank initially. This indicates why several losses in the crisis period were unintentional, which ensured that the banks remained stable and endured without contagion-induced falls. The response to the contagion was the central government’s deposit policy, bringing an end to defaults. Nevertheless, since the sequence of errors began in the early 1920s, well before contagion was evident, the underlying trigger must be contagion. Now it seems like the bank sector has undergone a shake-out that was worsened during the crisis by the deteriorating economic conditions. Although the reality that incidents occurred almost synonymous with the creation of the FDIC at first glance, suggested that contagion may have been effective, there are just as plausible more explanations for this simultaneity. Of instance, the availability of deposit insurance of deposits that did not represent bank danger undoubtedly raised risky bank profitability and shielded such banks from collapse. In addition, after deposit insurance was created, the mechanism that guided the supervisors to close distressed banks quickly eroded. With data from the Asian banking sector, researchers (Gunji, & Yuan, 2018) explored the correlation between monetary policy credibility and banks corporate diversification. It was found out that the impact of monetary policy is enhanced by bank diversification. They split the samples into developing countries and less developed countries to investigate whether the association between diversification and the impact of monetary policy showed regional variations. They have viewed China, India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam as less established nations and have rendered SouthKorea, Hong Kong, Taiwan, andSingapore industrialized countries. In this analysis, researchers used banking data for eleven Asian countries from 1995 to 2008 to analyze whether diversification has an effect on the dissemination of monetary policies. As in the case of the overall world, studies have indicated that greater diversification decreases the influence of restrictive monetary policies. They found that monetary policy impacts more complex banks. Others (Kim, Batten, & Ryu, 2020) also studied the diversification effect of bankson thefinancial stability and have noticed a substantially non-linear (i.e., inverted U-shaped) relationship by utilizing a study of commercial banks that are commercially located in OECD countries. The findings indicate that modest diversification of banks improves bank stability, but extreme diversification has a negative impact. They also considered the temporal aspect of this interaction. For example, before the financial crisis, diversification of the banking sector minimized the variance in bank stability but intensified their variance during the global economic downturn. And in times of recession, the banks are well-positioned to center their operations and activities on the conventional broker roles (i.e., deposits and loans). In addition, the findings indicate that most global regulators to reduce bank risk promote diversification; diversification of banking may aggravate financial volatility in banking or enhance the risk of financial market failure in the event of unusual events, such as financial crises.Replt to Post 2: 150 Words and ReferencesPerformance and risks in current economicsAccording to Moudud-Ul-Huq, Zheng, Gupta, Hossain & Biswas (2020), the quadratic effect can be measured for the diversion of a bank, financial crisis all over the world, their size, and performances and behavior of the risk management. For measuring the effects of those things the moments for the generalize things can be chosen, and the panel set of unbalanced data is used for the measurement degree of some large number of samples for the assessment purpose. Some key results are there for that current economic purpose. The son-performing ratio of the loans is increased and that can turn banks into unstable and underperforming. Diversification of banks can be beneficial and that results in a heterogeneous one, which can make sure about the theory of the portfolio diversifications. Small banks can have some bigger portfolio and which is greater than the large banks. Large banks in various other countries can be benefited from the diversification of the income than the banks which are small in size. Some studies are going on there which can tell us that the economics which is emerging can use the financial crisis to make the portfolio of the diversification. It is helpful for risk control and the performance improvement of the bank. The global crisis of financial matters can cause various changes in the field of finance, banking, and many more. Liberalization and the competition between the market values urge to shift their main and basic focus from the minimal businesses. Developed countries are also adopting this technique for the diversification of bank, income implication, and in the performance risk. Income from the diversification can enhance some other types of risks also, those are, maker risk, credit risk, liquid risk, etc. diversification of income can also make some profits regarding the banking purpose.Financial capacity of local things and making value from bank failureAs per Rajan & Ramcharan (2016), the differences used for the regulations for the identification, one can find the financial intermediation which can reduce the rates of recovery for bank failure. Local land prices can be depressed and it can also associate with other distressing conditions for the banks that are situated nearby. Fire bank tools can be used for the lower economic places for reducing the assets of banks which works are failed. The failure of the banks is contagious and the assets of those financial things can be used for recovering the available market for the intermediate things. 4 channels are there which can detect the failure and decline process of the asset value. Value decline processes which are transmission related can be declined exclusively and mutually. For the banking failures, some more regulatory work assets can be used for the recovery of those failures. State line bank branching can be reduced as there are more transportation costs and for those, the combined process of a transaction must be implemented for identifying the reason behind the failure and tools are set for making some recovery on it. Various studies are there regarding these recovery process and the identification process. These are all related to the failed banking and the new transaction process and also the process for which can cause the diversifications. The diversification is taken place for recovering such things, and various investment areas are made for backup and safe investment of money which can not be failed and also can not be overcome through that. Local banks are capable of doing these are they are small banks and can handle all the matters of it. Recognition sections are there who help in doing these things and can be very helpful in resolving the problem and also overcome form the failure.