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THE GRAMM‐LEACH‐BLILEY ACT OF 1999: RISK IMPLICATIONS FOR THE FINANCIAL SERVICES INDUSTRY
Author(s) -
Akhigbe Aigbe,
Whyte Ann Marie
Publication year - 2004
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.2004.00093.x
Subject(s) - financial services , business , investment banking , insurance industry , finance , broker dealer , business risks , banking industry , financial risk , investment (military) , financial system , actuarial science , risk analysis (engineering) , politics , political science , law
We document significant risk changes in the financial services industry following the passage of the Gramm‐Leach‐Bliley Act of 1999. Banks experience an increase in risk regardless of whether they have taken steps to participate actively in the investment banking business. Insurance companies also experience an increase in risk, whereas securities firms experience a decrease in risk. We attribute the increase in risk for banks and insurance companies to the fact that the securities business is relatively more risky, and the decline in risk for securities firms to the fact that they can now diversify into relatively less risky banking and insurance businesses.