The Hazard of Merger by Absorption - Why Some Knappschaften Merged and Others Did Not: 1861-1920

35 Pages Posted: 4 Apr 2011

Date Written: March 1, 2011

Abstract

By the mid-19th century, following the Prussian mining reform, German miners‘ combined mutual health and pension funds took on the characteristics of social insurance and underwent a concentration process driven by mergers, liquidations, and unequal internal growth. This paper investigates the determinants of mergers by absorption among Prussian funds combined with quantitative evidence from a regression model, provides new insights into the first social-insurance merger wave in Germany. While most contemporary sources convey the impression that funds were merged to stabilize the entire insurance scheme by sorting out actuarially unviable and financially distressed funds, statistical evidence suggests that funds were absorbed over time primarily because they offered advantages to the absorbing fund and, hence, were quite attractive targets.

Keywords: competing risk, financial distress, insurance, Knappschaft, liquidation

JEL Classification: C41, G22, G23, I31, N33

Suggested Citation

Jopp, Tobias Alexander, The Hazard of Merger by Absorption - Why Some Knappschaften Merged and Others Did Not: 1861-1920 (March 1, 2011). Available at SSRN: https://ssrn.com/abstract=1797592 or http://dx.doi.org/10.2139/ssrn.1797592

Tobias Alexander Jopp (Contact Author)

affiliation not provided to SSRN ( email )

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