how bancassurance affects the profitability of the banks

The empirical study shows that, all explanatory variables in this study have negative effect on the profitability measure except GDP and inflation rate. First, there is a group of determinants of profitability thatare specific to eachbank and that, in many cases, are the direct in case of banks that adopt bancassurance. Bancassurance is an arrangement in which a bank and an insurance company form a partnership so that the insurance company can sell its products to … The major portion of a bank's profit comes from the fees that it charges for its services and the interest that it earns on its assets. Bancassurance simply means selling of insurance products bybanks. Capital market ensures the solvency of the financial system, and Xia [31] China 19992006 To examine the effects of Bancassurance created by simulated merger on the profitability and risk of banks and insurance companies involved. Since traditional banking is the core of smaller banks, this ratio will be higher for them in comparison to their big banking counterparts. An additional 1 year lag is also incorporated for each variable. This affects cash flows and banks will become illiquid, leading to possible bankrupt cy, which will threaten the sustainable development of banks as we ll as its profitability… 4 0 obj Language: english. universal banks (those with a significant share of non-interest income) are less exposed to risk, whereas specialized banks have higher profitability, but the volatility (reaction to business cycles) is greater (Lieven et al. between Inflation and profitability of banks, there is a strong correlation. Address for correspondence: 64 Zhinan Road, Section 2, Wenshan District, Taipei City, Taiwan 116, ROC. Our empirical results provide evidence to support that bancassurance business offers substantial benefits for banks, ultimately leading to an increase in shareholder value. The Impact of Bancassurance on the Efficiency and Profitability of Banks: Evidence from Taiwan Jin-Lung Peng Associate Professor, Department of Risk Management and Insurance National Chengchi University, Taiwan Nadege Genetay, Philip Molyneux (auth.) Let us reflect on few vital parameters for small and large banks and how it affects their profitability. File: PDF, 26.66 MB . For example, if the insurance company actuaries review a certain area one year and determine it has a low risk factor and only charges very minimal premiums that year, but then by the end of the year they see a rise in crime, a major disaster, high losses, or claims payouts, it will cause them to review their results and change the premium they charge for that area in the new year. of Banking/Finance Imo State Polytechnic Umuagwo, P.M.B. Almeida and Campello (2007) predicted that there is an inverse relationship among internally generated funds and the need for externally This report provides a deep analysis of the effects that foreign exchange rates exhibits in the operations of a bank. What is CVP Analysis? The impact of bancassurance on efficiency and profitability of banks: Evidence from the banking industry in Taiwan. Banks are vulnerable to a number of risks, and therefore, banks which assess and take steps to mitigate the impact of these risks stay healthy and perform better. Other readers will always be interested in your opinion of the books you've read. In the recent years, the bank management is seen more an exercise in risk identification and risk management. By continuing you agree to the use of cookies. A number of related studies have investigated the impact of ‘merger and acquisition’ (M&A) transactions between banks and insurance firms (Fields et al., 2007, Chen and Tan, 2011, Dontis‐Charitos et al., 2011, and Slijkerman et al., 2013), and have examined other forms including strategic alliances and joint ventures between banks and other firms (Amici et al., 2013), with the … profitability of banks. Coldwell (2001): “Growth Strategies Drawing a framework from the financial economics literature and utilising a dynamic panel data design covering 2004–2009, this study examines the profitability of micro-life insurers in Nigeria.

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