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Does the Stock Market Compensate Banks for Diversifying into the Insurance Business?
Author(s) -
DontisCharitos Panagiotis,
Molyneux Philip,
Staikouras Sotiris K.
Publication year - 2011
Publication title -
financial markets, institutions and instruments
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 23
eISSN - 1468-0416
pISSN - 0963-8008
DOI - 10.1111/j.1468-0416.2010.00164.x
Subject(s) - univariate , equity (law) , business , bancassurance , multivariate statistics , categorization , insurance industry , multivariate analysis , stock (firearms) , banking industry , actuarial science , financial system , insurance policy , general insurance , insurance law , philosophy , statistics , mathematics , epistemology , machine learning , political science , computer science , law , mechanical engineering , engineering
This paper explores a wide range of corporate restructurings, all available deals from wire services, in the banking and insurance sectors that led to bancassurance ventures. An event study methodology is employed to calculate excess returns on and around the deals’ announcement date. Using both univariate and multivariate analysis the paper finds bank driven mergers, deal's size and regional categorization all triggering positive and significant market reactions. Unlike the univariate framework, multivariate analysis shows that geographic focus and language are not significant factors. The results also indicate that markets are indifferent with respect to bank withdrawals from the bank‐insurance operations. Finally, Canadian, U.S. and European bank‐insurance deals produce positive results, while Australasian bidders offer statistically insignificant equity returns.