The Separation of Banking from Insurance: Evidence from Europe

Mohamed Nurullah () and Sotiris K. Staikouras
Additional contact information
Mohamed Nurullah: Glasgow Caledonian University, U.K.
Sotiris K. Staikouras: Cass Business School, U.K.

Multinational Finance Journal, 2008, vol. 12, issue 3-4, 157-184

Abstract: The European market of banks and insurance companies has traditionally no exact boundaries between insurance and banking activities. Such business arena poses distinctive challenges to both banking and insurance industries. The paper statistically evaluates the feasibility of a hybrid portfolio integrating banking and insurance services. It examines the risk-return effects of European banks’ diversification into life and non-life insurance underwriting, as well as into insurance broking businesses. More specifically, it focuses on financial data and analyzes changes in profitability, return volatility and creditworthiness of those financial institutions. The empirical results indicate that diversification by European banks into life and non-life insurance underwriting activities increases banks’ risk. Unlike the non-life insurance sector, the return on life assurance underwriting increases significantly. On the other hand, insurance broking returns increase as well, while volatility and possible bankruptcy remain insignificant. This suggests that the interface of banks and insurance broking activities could be further explored.

Keywords: Bancassurance; Financial institutions; Bank diversification; Insurance activities; Risk-return analysis (search for similar items in EconPapers)
JEL-codes: G21 G22 G28 G34 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.mfsociety.org/modules/modDashboard/uplo ... 4t7v1kh11ht5rmh4.pdf
http://www.mfsociety.org/modules/modDashboard/uplo ... ogleScholar/781.html

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mfj:journl:v:12:y:2008:i:3-4:p:157-184

Access Statistics for this article

Multinational Finance Journal is currently edited by Panayiotis C. Andreou

More articles in Multinational Finance Journal from Multinational Finance Journal Contact information at EDIRC.
Bibliographic data for series maintained by Theodossiou Panayiotis ().