Financial Analytics: Science and Experience
 

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Evaluation of the effectiveness of bancassurance on the basis of modeling of the merger of commercial banks and insurance companies

Vol. 12, Iss. 2, JUNE 2019

Received: 15 October 2018

Received in revised form: 22 October 2018

Accepted: 30 October 2018

Available online: 30 May 2019

Subject Heading: RISK, ANALYSIS AND EVALUATION

JEL Classification: G17, G21, G22

Pages: 165–182

https://doi.org/10.24891/fa.12.2.165

Ekimov A.V. National Research Ogarev Mordovia State University (MRSU), Saransk, Republic of Mordovia, Russian Federation
alex-saransk@mail.ru

ORCID id: not available

Subject This article examines the issues of modeling of the merger of Russian companies of banking and insurance sectors to assess the effectiveness of bank insurance.
Objectives The article aims to review the existing models of evaluation of the effectiveness of bank insurance, and develop and test an improved model based on the merger of banking institutions and insurance companies to assess the Risk-Return profile.
Methods The principle of the improved model used for the analysis involves combining the final balance indices of previously independent companies to simulate a hypothetical merger.
Results On the basis of the improved model of evaluation of the effectiveness of bank insurance, two sectors of the financial market were theoretically merged, showing risk reduction and increase in the hypothetically consolidated companies' return on assets (liabilities).
Conclusions and Relevance The results of the simulation made it possible to assess the effectiveness of the bank insurance and showed that integration processes between commercial banks and insurance companies can be considered attractive for both sectors. The development of bank insurance can have a moderate effect of risk reducing and return increasing at the same time. The results of the study can be used in the activities of commercial banks and insurance companies to assess the potential effect of the bank insurance.

Keywords: bancassurance, commercial bank, insurance company, integration processes, diversification, simulation

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