The Gramm-Leach-Bliley Act of 1999: Risk Implications for the Financial Services Industry

Posted: 10 Feb 2004

See all articles by Aigbe Akhigbe

Aigbe Akhigbe

University of Akron - Department of Finance

Ann Marie Whyte

University of Central Florida

Abstract

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 relative less risky banking and insurance businesses.

JEL Classification: G21, G22

Suggested Citation

Akhigbe, Aigbe and Whyte, Ann Marie, The Gramm-Leach-Bliley Act of 1999: Risk Implications for the Financial Services Industry. Available at SSRN: https://ssrn.com/abstract=498588

Aigbe Akhigbe

University of Akron - Department of Finance ( email )

Akron, OH 44325-4803
United States
330-972-6883 (Phone)

Ann Marie Whyte (Contact Author)

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

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