An event study analysis of international ventures between banks and insurance firms

Post‐merger strategy and performance: evidence from the US and European banking industries

“…14 Recent evidence using the market reaction to product diversifying bank mergers also points to these deals having positive outcomes on average. Fields et al (2007) and Staikouras (2009) report positive abnormal bidder returns associated with mergers between banks and insurance companies. However, Hagendorff et al (2008) show that product diversifying bank mergers only generate shareholder wealth in strong investor protection environments.…”

Does the Stock Market Compensate Banks for Diversifying into the Insurance Business?

“…Innovation in technology, increased customer sophistication, regulatory changes, market globalization and reduced multinational trade barriers are a few of the factors underpinning the major shake-up (Staikouras, 2006b;Goddard, Molyneux, Wilson & Tavakoli, 2007). Some studies have concentrated on the risk-return profile of bank-insurance conglomerates (Brown, Genetay & Molyneux, 1996;Genetay & Molyneux, 1998;Lown, Osler, Strahan & Sufi, 2000;Deng & Elyasiani, 2008;Nurullah & Staikouras, 2008) generally showing evidence of risk diversification benefits; others have focused on efficiency advantages gained via the 'new' corporate structure (Vander Vennet, 1996; some have presented institutional analysis (Molyneux, Altunbas & Gardener, 1997; Van den Berghe & Verweire, 2001;Staikouras, 2006b;Kalotychou & Staikouras, 2007) 1 ; while the final strand has examined the wealth effects of bank-insurance deals (Fields, Fraser & Kolari, 2007a,b;Staikouras, 2009) with some illustrating a positive response by banks, insurers and brokerage firms to specific announcements, and/or removal of certain regulatory constraints (Johnston & Madura, 2000;Carow, 2001a,b;Carow & Kane, 2002;Carow & Heron, 2002;Cowan, Howell & Power, 2002). Although links between banks and insurance firms can be traced back to the 19 th century (Molyneux, Altunbas & Gardener, 1997) it was not until banks focused on growing non-interest income as a main strategic objective from the mid-1980's.…”

“…The banking and insurance sectors have not been immune to these changes. Direct evidence on the equity wealth effects of bancassurance deals is somewhat limited and yields conflicting findings (Cybo-Ottone & Murgia, 2000;Delong, 2001;Fields, Fraser & Kolari, 2007a,b;Staikouras 2009). Since then, the bank-insurance business has become the norm rather than the exception in various parts of the world (Genetay & Molyneux, 1998).…”

The Effect of Bank Activity Restriction on Life Insurers’ Efficiency: Evidence from European Markets

“…Others document efficiency gains through the bancassurance structure (Fields, Fraser & Kolari, 2007a, b). Studies also stock market reactions to the announcements of bank-insurance deals (Fields, Fraser & Kolari, 2007a, b;Chen, Li, Moshirian & Tan, 2007;Staikouras, 2009). We add to this strand of literature by exploring the efficiency gains in the insurance sector by lowering bank entry restrictions into insurance operations.…”