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Suggestions for Bancassurance Markets in China: Implications from European Countries

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Abstract

This study discusses the operational benefits of integration of the banking and insurance sub-sectors in Europe to formulate policy recommendations for the bancassurance markets in an emerging country, China. When the financial integration of banking and insurance services began in European countries in the 1990s, most banks and insurance companies had already been listed for some time. Thus, we use the monthly stock returns of banks and insurance companies that had not yet been integrated as of 2008 to examine efficient frontier portfolio and pairwise combinations in European bancassurance markets. We find that portfolio diversification is an important benefit of banks integrating with different types of insurance companies. Consistent with the literature, we further show that banks strategically involved in non-life insurance will benefit in terms of enhanced returns and reduced risks. Our results present implications for building a bancassurance market in China.

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Notes

  1. Chen et al. (2009).

  2. Bernoth and Pick (2011).

  3. Finaccord Ltd (2013).

  4. Swiss Re (2002).

  5. Benoist (2002).

  6. Verma and Chandra (2013).

  7. White (1990).

  8. Liang and Ching (2010).

  9. Estrella (2001).

  10. Boyd and Graham (1988); Boyd et al. (1993); Estrella (2001).

  11. Davis (2007).

  12. Voutilainen (2005); Swiss Re (2007).

  13. Lown et al. (2000).

  14. Ernst & Young (2010).

  15. Artikis et al. (2008).

  16. Falautano and Marsiglia (2003).

  17. Gora (1997); Fields et al. (2007a, 2007b).

  18. Fields et al. (2007b).

  19. Staikouras (2009); Chen and Tan (2011); Dontis-Charitos et al. (2011).

  20. Dontis-Charitos et al. (2011).

  21. Fields et al. (2007a, 2007b).

  22. Gora (1997).

  23. Voutilainen (2005).

  24. Bergendahl (1995).

  25. Markowitz (1952).

  26. Eun and Resnick (1988).

  27. Reichert et al. (2008); Liang and Reichert (2010).

  28. Swiss Re and BCG (2009).

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Authors and Affiliations

  1. Department of International Trade, College of Business, Feng Chia University, 100 Wenhwa Rd., Seatwen, Taichung, 40724, Taiwan

    Hsin-Yu Liang

  2. School of Business and Management, Southern University College, PTD 64888, 15KM, Jalan Skudai, P. O. Box 76, 81300, Skudai, Johor, Malaysia

    Yann Peng Ching

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  1. Hsin-Yu Liang
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Liang, HY., Ching, Y. Suggestions for Bancassurance Markets in China: Implications from European Countries. Geneva Pap Risk Insur Issues Pract 40, 279–294 (2015). https://doi.org/10.1057/gpp.2014.22

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