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Bancassurance efficiency gains: evidence from the Italian banking and insurance industries

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  • Franco Fiordelisi
  • Ornella Ricci

Abstract

Bancassurance has rapidly grown in Europe over the past 20 years catching the attention of managers and academia. Most dedicated studies have only been descriptive in nature, while the number of empirical studies is very limited. Potential efficiency gains are a poorly investigated issue, even though cost and revenue synergies are commonly recognised among the main economic rationales for conglomeration. Our paper aims to assess bancassurance performance gains (from both the banking and the insurance standpoints) in the Italian banking and insurance sectors over the period 2005--2006 by estimating cost and profit efficiency using stochastic frontier analysis. With regard to the banking industry, we do not show any strong evidence in favour of entering the life insurance business. The investigation into the insurance industry highlights the competitive viability of bancassurance as a distribution channel, especially in terms of cost efficiency. In terms of profitability, our findings suggest that the mix of products should be continuously revised to adapt to customer needs and the evolution of financial markets. As a consequence, ownership links are not necessarily the best bancassurance strategy, and the parties involved should also consider more flexible forms of cooperation, such as cross-selling agreements and non-equity strategic alliances.

Suggested Citation

  • Franco Fiordelisi & Ornella Ricci, 2011. "Bancassurance efficiency gains: evidence from the Italian banking and insurance industries," The European Journal of Finance, Taylor & Francis Journals, vol. 17(9-10), pages 789-810, November.
  • Handle: RePEc:taf:eurjfi:v:17:y:2011:i:9-10:p:789-810
    DOI: 10.1080/1351847X.2010.538519
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    Cited by:

    1. Amici, Alessandra & Fiordelisi, Franco & Masala, Francesco & Ricci, Ornella & Sist, Federica, 2013. "Value creation in banking through strategic alliances and joint ventures," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1386-1396.
    2. Francesco Aiello & Graziella Bonanno, 2016. "Efficiency in banking: a meta-regression analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 112-149, January.
    3. Chrysovalantis Gaganis & Iftekhar Hasan & Fotios Pasiouras, 2013. "Efficiency and stock returns: evidence from the insurance industry," Journal of Productivity Analysis, Springer, vol. 40(3), pages 429-442, December.

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