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Can the interests of shareholders explain industry attitudes toward banking-insurance mergers?

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Abstract

The banking industry generally supports and the insurance industry generally opposes the removal of regulatory boundaries between the two industries. In an effort to explain these industry attitudes, this article examines the effect, in the absence of synergies, of hypothetical mergers of banks and insurance companies on shareholders' risk and return. The results suggest that, if cash flows are not impacted by the mergers, the attitudes of industry management toward inter-industry mergers cannot be motivated by concerns for shareholder risk and return since, during the data period considered, insurer shareholders would have gained more by acquiring banks than bank shareholders would have gained from acquiring insurers.

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Authors and Affiliations

  1. Department of Economics, Finance and Legal Studies, The University of Alabama, 35487-0224, Tuscaloosa, AL

    James Allen Ligon

  2. Department of Economics, Colorado State University, Fort Collins, CO

    Vickie Lynn Bajtelsmit

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  1. Vickie Lynn Bajtelsmit
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  2. James Allen Ligon
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Bajtelsmit, V.L., Ligon, J.A. Can the interests of shareholders explain industry attitudes toward banking-insurance mergers?. J Econ Finan 20, 3–12 (1996). https://doi.org/10.1007/BF02920887

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