Date of Award


Degree Type


Degree Name

Doctor of Philosophy (PhD)


Risk Management and Insurance

First Advisor

Richard Phillips - Chair

Second Advisor

Robert Klein

Third Advisor

Martin Grace

Fourth Advisor

Larry Wall

Fifth Advisor

Harold Skipper


The enactment of the Gramm-Leach-Bliley Act of 1999 promised the most fundamental reform to be made in U.S. financial services regulation in more than half a century. The Gramm-Leach-Bliley Act (GLB) removed barriers that forced separation between commercial banks, investment banks, and insurance companies; and it allowed subsidiaries of banks or insurance companies to engage in a broad range of financial activities that were not permitted for banks or insurers themselves. Few doubted the potential for GLB to have a profound impact on financial service providers and on the financial market. However, there is a striking lack of empirical research on the effects of diversification by financial firms. The first goal of this dissertation is to identify domestic “assurbanks” (insurers owning banks) and “bancassurers” (banks owning insurers) and to identify the unique subsidiaries of financial services companies licensed as commercial banks, thrifts, or insurance companies in the U.S. We construct a unique dataset that links the banking and insurance regulatory datasets. A second objective is to investigate the effects of integrating the banking and insurance sectors of the U.S. economy. We evaluate the market structure and operating performance of financial institutions in the integrated banking and insurance industry. Gains from exploiting scope economies and product mix efficiencies are often cited as motives for financial institution integration. A third objective is to estimate efficiency effects from the economies of scope across the two formally separate sectors by estimating multi-product costs, revenue, and profit functions. The final objective is to test whether scope economies exist for firms that jointly produce financial products across multiple sectors and to explain the variation of scope economy estimations. The empirical evidence suggests that both domestic assurbanks and bancassurers are large in size and count for a significant portion of the banking and insurance market share. These firms are also more diversified in terms of their traditional products with a focus on personal line products. Large bancassurers appear more interested in investing in small-size life and property-liability subsidiaries. Large assurbanks are more interested in acquiring small-size thrifts. Banks prefer to affiliate with life insurance more than property-liability insurance, and insurers are more likely to affiliate with thrift saving banks than to affiliate with commercial banks. Diversified firms have higher profitability in their traditional lines of business. Bancassurers perform well in the insurance business, but most assurbanks lose money in their banking division. The scope economy results; investigating consumption complementarities suggests that a significant number of cost scope diseconomies, revenue scope economies, and weak profit scope economies exist in the post-GLB U.S. integrated banking and insurance sectors. The scope economies are variant among firms, and certain firm characteristics (size, business portfolio, geographic diversification, product mix and diversification, insurance distribution system, and X-efficiency) are the determinants of scope economies.


Included in

Insurance Commons