Consolidation and Systemic Risk in the International Insurance Industry

55 Pages Posted: 26 Aug 2012 Last revised: 9 Apr 2015

See all articles by Janina Muhlnickel

Janina Muhlnickel

Technical University of Dortmund

Gregor N. F. Weiss

University of Leipzig - Faculty of Economics and Management Science

Date Written: April 9, 2015

Abstract

This paper is the first to examine the effects of consolidation in the international insurance industry on the acquirers' contribution to systemic risk. We analyze a sample of 394 international domestic and cross-border mergers and find a strong positive relation between consolidation in the insurance industry and moderate systemic risk in the insurance and banking sector. Furthermore, we find strong empirical evidence in support of hypotheses that firm size, non-traditional financing activities, and diversification across insurance lines all add to the destabilizing effect of insurance consolidation.

Keywords: Financial Crises, Insurance Industry, Systemic Risk, Consolidation, Mergers

JEL Classification: G22, G01, G34

Suggested Citation

Muhlnickel, Janina and Weiss, Gregor N. F., Consolidation and Systemic Risk in the International Insurance Industry (April 9, 2015). Journal of Financial Stability, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2135041 or http://dx.doi.org/10.2139/ssrn.2135041

Janina Muhlnickel

Technical University of Dortmund ( email )

Emil-Figge-Straße 50
Dortmund, 44227
Germany

Gregor N. F. Weiss (Contact Author)

University of Leipzig - Faculty of Economics and Management Science ( email )

Grimmaische Str. 12
Leipzig, 04109
Germany
+49 341 97 33821 (Phone)
+49 341 97 33829 (Fax)

HOME PAGE: http://www.wifa.uni-leipzig.de/nfdl

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