Cross-Border M&As in the Financial Sector: Is Banking Different from Insurance

27 Pages Posted: 31 Mar 2007

See all articles by Dario Focarelli

Dario Focarelli

ANIA - Italian Association of Insurance Companies; Catholic University of Milan

Alberto F. Pozzolo

Roma Tre University

Date Written: March 22, 2007

Abstract

This paper investigates what factors might help explain the internationalization strategy of banks and insurance companies, by comparing the determinants of cross-border M&As in the two sectors in a unified framework. The empirical analysis shows that between 1990 and 2003 the internationalization of banks and insurance companies followed similar patterns. Distance and economic and cultural integration are important determinants for both the banks' and the insurance companies' expansion abroad. Comparative advantage also has a prominent role, the more so for banks. The evidence is less supportive of the view that cross-border M&As are more frequent between similar countries, as predicted by the new trade theory. Finally, and most interestingly, we find indirect evidence consistent with the hypothesis that implicit barriers to foreign entry are more important in explaining the behavior of banks than that of insurance companies.

Keywords: international banking and insurance, foreign direct investment

JEL Classification: E30, G21, G22, F21, F23

Suggested Citation

Focarelli, Dario and Pozzolo, Alberto F., Cross-Border M&As in the Financial Sector: Is Banking Different from Insurance (March 22, 2007). Available at SSRN: https://ssrn.com/abstract=976009 or http://dx.doi.org/10.2139/ssrn.976009

Dario Focarelli (Contact Author)

ANIA - Italian Association of Insurance Companies ( email )

Via di San Nicola da Tolentino, 72
Rome, 00187
Italy
+39.06.32688619 (Phone)
+39.06.91622570 (Fax)

Catholic University of Milan ( email )

Largo Gemelli 1
Milan, MI Milano 20123
Italy

HOME PAGE: http://https://docenti.unicatt.it/ppd2/it/#/it/docenti/71049/dario-focarelli/profilo

Alberto F. Pozzolo

Roma Tre University ( email )

Via Ostiense 163
Roma, RM 00154
Italy

HOME PAGE: http://www.uniroma3.it/

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