On the portfolio effects of financial convergence - a review of the literature
This paper reviews the literature on the effects of combining banking and nonbank financial activities on banking organizations' risk and return. In general, securities activities, insurance agency, and insurance underwriting are all riskier and more profitable than banking activities. They also have the potential to provide diversification benefits to banking organizations. While real estate agency, title abstract activities, and real estate operation are more profitable than banking, real estate development may not be. Real estate activities are riskier than banking activities in general, and their diversification benefits for banking organizations are less clear.
Volume (Year): (1999)
Issue (Month): ()
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- Rose, Peter S, 1989. "Diversification of the Banking Firm," The Financial Review, Eastern Finance Association, vol. 24(2), pages 251-80, May.
- Flannery, Mark J., 1991. "Pricing deposit insurance when the insurer measures bank risk with error," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 975-998, September.
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Working Papers in Applied Economic Theory
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- Simon H. Kwan, 1998. "Securities activities by commercial banking firms' section 20 subsidiaries: risk, return, and diversification benefits," Proceedings 609, Federal Reserve Bank of Chicago.
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- Simon Kwan, 1995. "The economics of merging commercial and investment banking," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may19.
- Elijah Brewer & Diana Fortier & Christine Pavel, 1988. "Bank risk from nonbank activities," Economic Perspectives, Federal Reserve Bank of Chicago, issue Jul, pages 14-26.
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