Cross-Industry Product Diversification and Contagion in Risk and Return: The Case of Bank-Insurance and Insurance-Bank Takeovers

Elyasiani, E., Dontis-Charitos, P. and Staikouras, S.K. 2016. Cross-Industry Product Diversification and Contagion in Risk and Return: The Case of Bank-Insurance and Insurance-Bank Takeovers. Journal of Risk and Insurance. 83 (3), pp. 681-718. https://doi.org/10.1111/jori.12066

TitleCross-Industry Product Diversification and Contagion in Risk and Return: The Case of Bank-Insurance and Insurance-Bank Takeovers
TypeJournal article
AuthorsElyasiani, E., Dontis-Charitos, P. and Staikouras, S.K.
Abstract

We investigate the impact of domestic/international bancassurance deals on the risk-return profiles of announcing and non-announcing banks and insurers within a GARCH model. Bank-insurance deals produce intra- and inter-industry contagion in both risk and return, with larger deals producing greater contagion. Bidder banks and peers experience positive abnormal returns, with the effects on insurer peers being stronger than those on bank peers. Insurance-bank deals produce insignificant excess returns for bidder and peer insurers and positive valuations for peer banks. Following the deal, the bank bidders’ idiosyncratic (systematic) risk falls (increases), while insurance bidders exhibit a lower systematic risk and maintain their idiosyncratic risk.

JournalJournal of Risk and Insurance
Journal citation83 (3), pp. 681-718
ISSN0022-4367
Year2016
PublisherWiley
Digital Object Identifier (DOI)https://doi.org/10.1111/jori.12066
Web address (URL)http://dx.doi.org/10.1111/jori.12066
Publication dates
Published25 Mar 2015
Published online25 Mar 2015
Published in printSep 2016

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