This study examines the effects of banks diversifying into non-traditional activities. Using bank data from 70 countries, we show that diversified banks underperform their specialized peers. We further analyze and compare whether dominant ownership and supervisory regulation help constrain negative diversification performance of banks across different economic periods. The evidence suggests that domestic dominant ownership consistently has the strongest effect on restricting poor diversification performance. Foreign dominant ownership helps limit negative effects of diversification in good times, but this effect has changed during recent financial crisis. Though government ownership and activity restrictions on banks negatively affect bank diversification performance during stable economic periods, they may help stabilize bank diversification performance during turbulent periods of economic shock.