The Effect of the Gramm-Leach-Bliley Act on the Insurance Industry

Neale, Faith R.; Peterson, Pamela P.

doi:10.2139/ssrn.447400

Cited by 7 publications

(4 citation statements)

References 21 publications

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“…In particular, Carow (2001) reports positive excess returns around court rulings allowing banks to sell annuities. Others, examine the market reaction to the Financial Services Modernization Act (FSMA) of 1999 and generally point to positive wealth effects for insurers (Carow and Heron, 2002;Hendershott et al, 2002;Neale and Peterson, 2005), except for Yildirim et al (2006), who report positive wealth effects and risk reductions for all FIs. Consistent with these studies, Carow and Kane's (2002) survey concludes that the relaxation of long-standing restrictions on the U.S. FIs may have redistributed, rather than created, value.…”

Section: Introductionmentioning

confidence: 99%

Wealth and risk implications of the Dodd-Frank Act on the U.S. financial intermediaries

Andriosopoulos

Chan

Dontis-Charitos

et al. 2017

Journal of Financial Stability

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We contribute to the current regulatory debate by examining the wealth and risk effects of the Dodd-Frank Act on U.S. financial institutions. We measure the effects of key legislative events of the Act by means of a multivariate regression model using the seemingly unrelated regression (SUR) framework. Our results indicate a mixed reaction by financial institutions during the various stages of the Act's legislative process. Further tests reveal that any positive reactions are driven by small and/or low risk institutions, while negative ones are consistent across subsets; except for investment banks. We also find market risk increases for most financial institutions that are dominated by small and/or low risk institutions. The cross-section results reveal that large institutions fare better than their smaller counterparts and that large investment banks gain value at the expense of others. Overall, the Dodd-Frank Act may have redistributed value among financial institutions, while not necessarily reducing the industry's riskiness.

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Section: Introductionmentioning

confidence: 99%

Wealth and risk implications of the Dodd-Frank Act on the U.S. financial intermediaries

Andriosopoulos

Chan

Dontis-Charitos

et al. 2017

Journal of Financial Stability

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“…Akhigbe and Whyte (2001), focusing on the late 1999 period, document a decrease in market risk for banks, insurance companies, and securities firms, yet an increase in unsystematic risk for banks and insurance companies 18 . The findings of Mamun et al (2005) and Neale and Peterson (2005) support a reduction in systematic risk accompanying the FSM Act for insurance companies. Specific to idiosyncratic risk, Correa and Suarez (2009) document lower idiosyncratic risk for banking firms following deregulation.…”

Section: Previous Evidence On Deregulation and Riskmentioning

confidence: 90%

“…25 25 See, for example, Allen, Cunningham, and Wood (1990), Ely and Robinson (1999), Cyree (2000), Carow and Heron (2002), and Neale and Peterson (2005). …”

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Deregulation and Risk

Semaan

Drake

2011

Financial Management

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The recent market turmoil has brought attention to how deregulation of the financial sector may affect risk. The purpose of our study is to examine the market's perception of risk associated with deregulation. We accomplish this by decomposing security risk around deregulation into systematic and unsystematic risk. We examine deregulation of several industries and find a consistent pattern of risk adjustment to deregulation, whereby the increase in security risk is temporary and largely unsystematic.

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An Examination of the Equity Market Response to The Gramm‐Leach‐Bliley Act Across Commercial Banking, Investment Banking, and Insurance Firms

Yildirim

Kwag

Collins

2006

Business Fin & Account

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This paper examines the wealth effects of the events surrounding the passage of the Gramm-Leach-Bliley Act of 1999 and changes in systematic risk from the pre-Act period to the post-Act period for commercial banks, investment banks, and insurance firms. The results suggest that investment banks and insurance firms are better positioned to exploit the benefits of product-line diversification opportunities allowed by the legislation compared to commercial banks that experience no significant market reaction. Further evidence indicates a significant risk shift and overall reduction in riskiness for the financial sectors under consideration around the event period. Copyright 2006 The Authors Journal compilation (c) 2006 Blackwell Publishing Ltd.

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The Effect of the Gramm-Leach-Bliley Act on the Insurance Industry

Cited by 7 publications

References 21 publications

Wealth and risk implications of the Dodd-Frank Act on the U.S. financial intermediaries

Wealth and risk implications of the Dodd-Frank Act on the U.S. financial intermediaries

Deregulation and Risk

An Examination of the Equity Market Response to The Gramm‐Leach‐Bliley Act Across Commercial Banking, Investment Banking, and Insurance Firms

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