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Is Bancassurance a Viable Model for Financial Firms?

Authors

  • L. Paige Fields,

    1. L. Paige Fields is at Texas A&M University, Mays Business School, Department of Finance, 351N Wehner Building, College Station, TX 77843-4218
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  • Donald R. Fraser,

    1. Donald R. Fraser is at Texas A&M University, Mays Business School, Department of Finance, 301R Wehner Building, College Station, TX 77843-4218
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  • James W. Kolari

    1. James W. Kolari is at Texas A&M University, Mays Business School, Department of Finance, 351R Wehner Building, College Station, TX 77843-4218.
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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.

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