Conglomeration versus strategic focus: evidence from the insurance industry

Allen Berger (), John Cummins, Mary Weiss and Hongmin Zi

No 1999-40, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We use data on U.S. insurance companies to examine the validity of the conglomeration hypothesis versus the strategic focus hypothesis for financial institutions. We distinguish between the hypotheses using profit scope economies, which measures the relative efficiency of joint versus specialized production, taking both costs and revenues into account. The results suggest that the conglomeration hypothesis dominates for some types of financial service providers and the strategic focus hypothesis dominates for other types. This may explain the empirical puzzle of why joint producers and specialists both appear to be competitively viable in the long run.

Keywords: Insurance industry; Financial services industry; Consolidation and merger of corporations (search for similar items in EconPapers)
Date: 1999
New Economics Papers: this item is included in nep-cfn, nep-fin and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.federalreserve.gov/pubs/feds/1999/199940/199940abs.html (text/html)
http://www.federalreserve.gov/pubs/feds/1999/199940/199940pap.pdf (application/pdf)

Related works:
Journal Article: Conglomeration versus Strategic Focus: Evidence from the Insurance Industry (2000)
Working Paper: Conglomeration Versus Strategic Focus: Evidence from the Insurance Industry (2000)
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:fip:fedgfe:1999-40

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().