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Consolidation and systemic risk in the international insurance industry

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  • Mühlnickel, Janina
  • Weiß, Gregor N.F.

Abstract

This paper is the first to examine the effects of consolidation in the international insurance industry on the acquirers’ contribution to systemic risk. We analyze a sample of 394 international domestic and cross-border mergers and find a strong positive relation between consolidation in the insurance industry and moderate systemic risk in the insurance and banking sector. Furthermore, we find strong empirical evidence in support of hypotheses that firm size, non-traditional financing activities, and diversification across insurance lines all add to the destabilizing effect of insurance consolidation.

Suggested Citation

  • Mühlnickel, Janina & Weiß, Gregor N.F., 2015. "Consolidation and systemic risk in the international insurance industry," Journal of Financial Stability, Elsevier, vol. 18(C), pages 187-202.
  • Handle: RePEc:eee:finsta:v:18:y:2015:i:c:p:187-202
    DOI: 10.1016/j.jfs.2015.04.005
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    Keywords

    Financial crises; Insurance industry; Systemic risk; Consolidation; Mergers;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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