Creator: Roberds, William. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 264 Abstract:
A popular method of investigating the market effects of multibank holding company (MBHC) affiliation involves regression of banks' local market share on a dummy variable for MBHC affiliation. The usefulness of this procedure is called into question by means of a theoretical counterexample.
Keyword: Bank holding company, Bank merger, Nonprice competition, and Multibank holding companies Subject (JEL): D40 - Market structure and pricing - General and G21 - Financial institutions and services - Banks ; Other depository institutions ; Micro finance institutions ; Mortgages
Creator: Boyd, John H. and Graham, Stanley L. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 398 Abstract:
This study estimates the effects of allowing bank holding companies (BHCs) to enter several lines of financial business not now permitted. A simulation technique is used to estimate the risk and return of hypothetical financial corporations after merger between a BHC and a large firm in each of these industries: securities, real estate, life insurance, property and casualty insurance, and insurance agencies. The study concludes that a merger between a BHC and a life insurance company may decrease the probability of bankruptcy for the merged firm relative to the BHC alone. This result does not hold true, however, for BHC mergers with firms in the other industries. In particular, BHC mergers with securities or real estate firms are found to increase the probability of bankruptcy.
Keyword: Bank holding company, Securities, Insurance, Risk, Merger, Bank holding companies, Bankruptcy, and Real estate Subject (JEL): G28 - Financial institutions and services - Government policy and regulation, G21 - Financial institutions and services - Banks ; Other depository institutions ; Micro finance institutions ; Mortgages, and G32 - Corporate finance and governance - Financing policy ; Financial risk and risk management ; Capital and ownership structure