Diversification, Size and Risk: the Case of Bank Acquisitions of Nonbank Financial Firms

B. Casu; P. Dontis-Charitos; S. Staikouras; J.M. Williams

doi:10.1111/eufm.12061

Diversification, Size and Risk: the Case of Bank Acquisitions of Nonbank Financial Firms

B. Casu
, P. Dontis-Charitos
, S. Staikouras
, J.M. Williams

Ysgol Busnes Albert Gubay

Allbwn ymchwil: Cyfraniad at gyfnodolyn › Erthygl › adolygiad gan gymheiriaid

Crynodeb

We investigate the risk effects of bank acquisitions of insurance companies and securities firms between 1991 and 2012 using a newly constructed dataset of MandA deals. We examine risk changes before and after deal announcements by decomposing risk into systematic and idiosyncratic components. Subsequently, we investigate the relationship between risk and diversification by modelling the determinants of risks. We find that bank combinations with securities firms yield higher risks than combinations with insurance companies. Bank size is an important and consistent determinant of risk whereas diversification is not. Our results inform the continuing debate on diversification versus functional separation of bank activities.

Iaith wreiddiol	Saesneg
Tudalennau (o-i)	235-275
Cyfnodolyn	European Financial Management
Cyfrol	22
Rhif cyhoeddi	2
Dyddiad ar-lein cynnar	17 Maw 2015
Dynodwyr Gwrthrych Digidol (DOIs)	https://doi.org/10.1111/eufm.12061
Statws	Cyhoeddwyd - 1 Maw 2016

Mynediad at Ddogfen

10.1111/eufm.12061

Ffeiliau eraill a chysylltiadau

https://onlinelibrary.wiley.com/action/downloadSupplement?doi=10.1111%2Feufm.12061&file=eufm12061-sup-0001-SuppApp-S1.docx

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title = "Diversification, Size and Risk: the Case of Bank Acquisitions of Nonbank Financial Firms",

abstract = "We investigate the risk effects of bank acquisitions of insurance companies and securities firms between 1991 and 2012 using a newly constructed dataset of MandA deals. We examine risk changes before and after deal announcements by decomposing risk into systematic and idiosyncratic components. Subsequently, we investigate the relationship between risk and diversification by modelling the determinants of risks. We find that bank combinations with securities firms yield higher risks than combinations with insurance companies. Bank size is an important and consistent determinant of risk whereas diversification is not. Our results inform the continuing debate on diversification versus functional separation of bank activities.",

keywords = "Banks, Nonbank Financial Firms, FInancial Conglomerates, Diversification, Risk Decomposition, Determinants of Risk",

author = "B. Casu and P. Dontis-Charitos and S. Staikouras and J.M. Williams",

year = "2016",

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doi = "10.1111/eufm.12061",

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T1 - Diversification, Size and Risk: the Case of Bank Acquisitions of Nonbank Financial Firms

AU - Casu, B.

AU - Dontis-Charitos, P.

AU - Staikouras, S.

AU - Williams, J.M.

PY - 2016/3/1

Y1 - 2016/3/1

N2 - We investigate the risk effects of bank acquisitions of insurance companies and securities firms between 1991 and 2012 using a newly constructed dataset of MandA deals. We examine risk changes before and after deal announcements by decomposing risk into systematic and idiosyncratic components. Subsequently, we investigate the relationship between risk and diversification by modelling the determinants of risks. We find that bank combinations with securities firms yield higher risks than combinations with insurance companies. Bank size is an important and consistent determinant of risk whereas diversification is not. Our results inform the continuing debate on diversification versus functional separation of bank activities.

AB - We investigate the risk effects of bank acquisitions of insurance companies and securities firms between 1991 and 2012 using a newly constructed dataset of MandA deals. We examine risk changes before and after deal announcements by decomposing risk into systematic and idiosyncratic components. Subsequently, we investigate the relationship between risk and diversification by modelling the determinants of risks. We find that bank combinations with securities firms yield higher risks than combinations with insurance companies. Bank size is an important and consistent determinant of risk whereas diversification is not. Our results inform the continuing debate on diversification versus functional separation of bank activities.

KW - Banks

KW - Nonbank Financial Firms

KW - FInancial Conglomerates

KW - Diversification

KW - Risk Decomposition

KW - Determinants of Risk

UR - https://onlinelibrary.wiley.com/action/downloadSupplement?doi=10.1111%2Feufm.12061&file=eufm12061-sup-0001-SuppApp-S1.docx

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DO - 10.1111/eufm.12061

M3 - Article

SN - 1468-036X

VL - 22

SP - 235

EP - 275

JO - European Financial Management

JF - European Financial Management

IS - 2

ER -

Diversification, Size and Risk: the Case of Bank Acquisitions of Nonbank Financial Firms

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