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Does the Stock Market Compensate Banks for Diversifying into the Insurance Business?Panagiotis Dontis-CharitosWestminster Business School, University of Westminster Philip Molyneuxaffiliation not provided to SSRN Sotiris K. StaikourasCity University - Cass Business School; ALBA Graduate Business School January 24, 2011 Financial Markets, Institutions & Instruments, Vol. 20, Issue 1, pp. 1-28, 2011 Abstract: 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.
Number of Pages in PDF File: 28 Keywords: Bank-insurance interface, divestments, financial conglomerates, event study, abnormal equity returns, G14, G21, G22 Accepted Paper SeriesDate posted: January 25, 2011Suggested CitationContact Information
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