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Is Bancassurance a Viable Model for Financial Firms?

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  • L. Paige Fields
  • Donald R. Fraser
  • James W. Kolari

Abstract

The bancassurance (i.e., bank and insurance company combinations) model for financial firm architecture has been widely used in Europe and recently has been adopted by U.S. financial firms. We provide evidence regarding the viability of bancassurance combinations for U.S. and non‐U.S. mergers between 1997 and 2002. We find positive gains and no significant risk shifts for shareholders of bidding firms, and that higher CEO stock ownership results in less positive gains for shareholders. These and other results suggest that bancassurance firms are viable entities that may play an important role in the future evolution of the U.S. financial system.

Suggested Citation

  • L. Paige Fields & Donald R. Fraser & James W. Kolari, 2007. "Is Bancassurance a Viable Model for Financial Firms?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 74(4), pages 777-794, December.
    • Handle: RePEc:bla:jrinsu:v:74:y:2007:i:4:p:777-794
    DOI: 10.1111/j.1539-6975.2007.00234.x
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    References listed on IDEAS

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    1. Saunders, Anthony & Walter, Ingo, 1994. "Universal Banking in the United States: What Could We Gain? What Could We Lose?," OUP Catalogue, Oxford University Press, number 9780195080698.
    2. Amihud, Yakov & DeLong, Gayle L. & Saunders, Anthony, 2002. "The effects of cross-border bank mergers on bank risk and value," Journal of International Money and Finance, Elsevier, vol. 21(6), pages 857-877, November.
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    1. Isinta & H. M & Aduda & J & Magutu & P, 2019. "Intervening Effect of Savings Mobilization on the Relationship between Bancassurance and Financial Performance of Commercial Banks in Kenya," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 8(2), pages 1-4.
    2. Elyas Elyasiani & Sotiris K. Staikouras & Panagiotis Dontis-Charitos, 2016. "Cross-Industry Product Diversification and Contagion in Risk and Return: The case of Bank-Insurance and Insurance-Bank Takeovers," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 83(3), pages 681-718, September.
    3. John K. Ashton & Robert S. Hudson, 2009. "Should the joint provision of credit insurance with unsecured lending be prohibited? An examination of the UK payment protection insurance market," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2009-08, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    4. Andriosopoulos, Kostas & Chan, Ka Kei & Dontis-Charitos, Panagiotis & Staikouras, Sotiris K., 2017. "Wealth and risk implications of the Dodd-Frank Act on the U.S. financial intermediaries," Journal of Financial Stability, Elsevier, vol. 33(C), pages 366-379.
    5. Mu-Sheng Chang & Elyas Elyasiani, 2015. "Do insurance activities enhance the performance of financial services holding companies?," Applied Economics, Taylor & Francis Journals, vol. 47(33), pages 3559-3576, July.
    6. Panagiotis Dontis‐Charitos & Philip Molyneux & Sotiris K. Staikouras, 2011. "Does the Stock Market Compensate Banks for Diversifying into the Insurance Business?," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 20(1), pages 1-28, February.
    7. Barbara Casu & Panagiotis Dontis†Charitos & Sotiris Staikouras & Jonathan Williams, 2016. "Diversification, Size and Risk: the Case of Bank Acquisitions of Nonbank Financial Firms," European Financial Management, European Financial Management Association, vol. 22(2), pages 235-275, March.
    8. Staikouras, Sotiris K., 2009. "An event study analysis of international ventures between banks and insurance firms," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(4), pages 675-691, October.
    9. Tsai-Jyh Chen, 2019. "Marketing channel, corporate reputation, and profitability of life insurers: evidence of bancassurance in Taiwan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(4), pages 679-701, October.
    10. Mamun, Abdullah, 2023. "Understanding growth and its policy implications for Canadian credit unions," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 652-665.
    11. Pih-Shuw Chen & Jia-Jan Lee & Pei-Fen & Ou, 2020. "A Study of Taiwanese Banks’ Home Loan Life Insurance Attached to Home Loans," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(6), pages 1-11.
    12. Tsai-Jyh Chen, 0. "The role of distribution channels in market discipline for the life insurance industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 0, pages 1-23.
    13. Tsai-Jyh Chen, 2021. "The role of distribution channels in market discipline for the life insurance industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(1), pages 107-129, January.

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