The Research On Synergy Theory Of Financial Integrated Operation

With the development of financial intermediaries, mixed operation is an important issue.Among which, bancassurance is a typical topic. This paper focuses on the following questions about bancassurance: the specific pattern and synergistic effect of financial comprehensive development, collaborative mechanism of the bank and the insurance company, the conditions of the process and results of the mechanism. Through these studies, we aim to provide some suggestions for financial institutions to make policy recommendations and for the operators and supervisors. In order to answer the above questions, this paper contains 6 chapters,16 sections in all.The starting point of this paper is the reason why financial integration appears, the end is to offer advises for integrated financial operation and regulation. The first two chapters are the basis of this paper. They clarify the concepts and meanings of the development of financial integration and provide theoretical and practical basis for research. Chapter I introduce the development process of the worldwide financial integration and the main features of financial integration. Chapter II is about analysis and definition of the research object, it redefines the connotation and denotation of bancassurance on the basis of prior theoretical overview and practical analysis. Section III of Chapter II sets the measurement model for bancassurance synergies.Chapter III analyses prerequisites of the synergistic effect firstly, and then analyses the links and differences between the development of the two sectors, the similarity and complementation from qualitative and quantitative on macro level.Chapter IV discusses the internal mechanism of synergy from a new perspective. The analysis firstly focuses on the analytical framework and the impact mechanisms of micro-stakeholder, and then focuses on the influence of motivation and game between banks and insurance companies on the development of bancassurance collaboration.Chapter V has an integrated and promotional analysis on Chapter III and Chapter IV, itanalyses the impact mechanism of the bancassurance synergy on the mixed form, agency business scale and the regulatory.Chapter VI analyzes the environment and policy of bancassurance from the reality of our country and proposes appropriate policy for financial industry. Discussions focus on the developing the real economy, achieving inclusive finance and improving people’s livelihood.The main points of this paper are:1.Synergy theory is a theoretical explanation of financial integration.This theory is particularly important in the bancassurance. Synergies of bancassurance exhibit different levels. With the development of bancassurance, its connotation and denotation change a lot,according to current theory and practice, bancassurance can be divided into three levels: on the first level,banks and insurance companies are independent financial institutions. The second level is the traditional theory of bancassurance, which includes "consignment agreement" mode, as well as "strategic alliance" mode. The third level is a form of the highest level of integration, which includes integration of equity and integration of business by one institution. The market performances of the bank and insurance company mergers and acquisitions may prove that investors recognize the bancassurance synergies.2.As financial industries, banking and insurance industry have certain homogeneity of assets, including funds, personnel, technology. This is the basis of synergies on business. On the other hand, their differences of income distribution is the basis of synergies on funding.Although there is a high correlation between development indicators of banking industry and the insurance industry, the cointegration of the stock market performance of the two industry is not obvious. This complementary of stock index is a form of bancassurance synergies in capital markets, it is also an important means of risk management. Different types of insurance companies have large differences on the associate degree with the banking business.Property insurance companies have a stronger complementary business with banks,while life insurance companies are more of an alternatives to the banks.Bancassurance cooperation could be "win-win" business, but not every business "win-win" is balanced,sometimes banks win more, sometimes insurance companies win more, so there are lots of competitions and conflictions between banks and insurance companies. In bancassurance cooperation, win-win presents everywhere, while imbalances are inevitable. Imbalancesinclude: uneven distribution of benefits, the importance is different accounting different systems, the risks and benefits do not match, and so on. This "win-win" and "unbalanced" feature results in the complex of game in bancassurance.3.Insurance penetration to banks reflects the ability of banks grabbing profits from the insurance industry, reflecting the degree of integrated management of the bank. Banks penetration to insurance reflects the banking industry’s influence on the insurance industry and the competitiveness of banks in the bancassurance business. Currently the bancassurance sales channels are mainly in retail business, but other bancassurance business scatter in various business sectors, the banks need to have a department for integration and optimization.For the insurance companies, they are also difficult to develop bancassurance without the support of funds, financial and other sectors. Bancassurance coordination departments in banks and insurance companies are in such a core position, they need both collaborate resources of their own institution and collaborate with the other business organizations.4.Mesoeconomics is a discipline which studies the economic phenomena systematically,it has important value to the study of financial integration which is the result of external environment and internal gaming of financial institutions. Macroeconomic environment and systems, including the level of economic development, financial structure, technological progress, and even spending habits play an indirect role in the foundation of mixed development by affecting the micro-distribution of benefits and other effects. Similarities of banks and insurance offer possibility for integration while differences provide the impetus for collaboration. The direct cause of the development of financial integration is the choice of regulators and financial institutions and customers based on their own interests. Only the combination of both macroeconomic factors and microeconomic factors can find the balance point and help us promote the integrated management of financial industry carefully.5.With the growth of banking and insurance industries, contacts between the two industries will become closer to each other. For the future direction of the bancassurance, we can study in the short, medium and long term. There are not an inevitable trend for bancassurance, it does not necessarily develop from junior to senior stage. There is no right or wrong because mixed business is merely a strategic choice, which is the most suitable choice for the development of financial institutions.6.Growth in the banking and insurance industries provide a broad mix platform forbancassurance. The diversification of their business provides a rich source for mixed business for each other. Bancassurance is no longer confined to the traditional agency business, but gradually penetrates into each other’s core business areas. In the long run, traditional banking and insurance industry may have ceased to exist, and be replaced by a more competitive organization, it may provide products which are characterized by both banking products and insurance products. With the long-term evolution of financial institutions, boundaries of banks and insurance companies will be increasingly blurred, there will be a new organization according to other criterions such as the different functions of financial institutions.7.Tightness and risk management of bancassurance enhance synchronously. With the insurance investment channels releasing, financial cooperation will help improve cooperation and innovation model and will further expand the scope of customers, rich forms of business cooperation. With the advent of the era of asset management, banks and insurance companies should identify their location, develop their respective advantages to expanding financing cooperation.8.Financial holding company is the most stable bancassurance mode. In the short term,institutions operating both banking and insurance business will not develop rapidly. Because in the absence of firewall protection, regulatory agencies have not the ability to control complex systemic risk.9.The development of bancassurance in china has its own characteristics, which is mainly affected by the social, economic, political and other environmental factors. Different financial institutions should choose their own mixed business model, and it should pay attention to protect the interests of consumers, which is also one of the issues that the regulators need concern. In addition, bancassurance has important social significance, it can help to develop the real economy, achieve inclusive finance and improve people’s livelihood.