Research On The Impact Of Bank-Insurance Cross-Shareholdings On The Risk Of Life Insurance Companies

Since the end of the last century,the financial supervision model of separate regulation which aimed at strengthening risk isolation were abandoned among countries around the world.It has become the trend for banks and insurance companies to achieve capital integration through cross-shareholdings.In order to adapt the trend of financial mixed operation,the former China Insurance Regulatory Commission(CIRC)and the former China Banking Regulatory Commission(CBRC)release the equity investment policies of insurance company investing banks and bank investing insurance companies respectively.And then,bank-insurance cross-shareholdings have become the main method of internal capital integration.Will bank-insurance cross-shareholdings increase the risk of life insurance companies? And through which channels? There are both practical and theoretical significance to prevent financial risk and strengthening financial supervision.Bank-insurance cross-shareholdings refers to the condition which bank or life insurance company holds shares of the other side through capital purchase.This way has been widely adopted by financial institutions in the United States and Europe,since the cooperation can increase revenue and reduce costs through scale economy and synergy effects.However,bank-insurance cross-shareholdings has Double-edged effect.On the one hand,it can promote the deep cooperation between banks and life insurance companies to adapt the fierce market competition.On the other hand,it may also increase transmission of risk which affect the risk of life insurance companies.Thus,the study investigates the impact of bank-insurance cross-shareholdings on the risks of life insurance companies.The structure of the study is as follows:The introduction is to discuss the background and significance of the study,and reviews the related literature on the impact of bank-insurance cross-shareholdings on the risk of life insurance companies.Next,summarizes the shortcomings of existing research,and draws the research direction of this article.Finally,the research content,methods,contributions and possible deficiencies are established.The introduction lay the foundation for subsequent research.The first chapter is the theoretical analysis about the impact of bank-insurance cross-shareholdings on life insurance company risks.The concept of bank-insurance cross-shareholding and life insurance company risk is defined according to the existing scholars' research on cross-shareholding and life insurance company risk.Next,explaining the theoretical basis of bank insurance cross-shareholding which based on synergy effect theory,transaction cost theory,scale economy theory,scope economy theory and coinsurance effect theory.Finally,explore the mechanism of bank-insurance cross-shareholding affecting the risk of life insurance companies.The main conclusion is that the influence direction of bank-insurance cross-shareholding on individual risks of life insurance companies is uncertain,but it will increase the systematic risk of life insurance companies by improving the correlation between life insurance companies and banks.The second chapter is the realistic analysis about the impact of bank-insurance cross-shareholdings on life insurance company risks,which analyzed the motivation,effects,policy background and current situation of bank-insurance cross-shareholding.And also include analyzed the risk of life insurance company.The main conclusions are as follows: First,in the context of the market-oriented development of the insurance and banking industries,the two sides have gradually formed cross-shareholdings.The economic effects produced include improve the operating by synergistic effect,lower operating costs by economies of scale,and to promote financial product innovation by resource integration.Second,the relaxation of equity investment policies of banks and life insurance companies provides conditions for cross-shareholding of the two sides.And the establishment of the China Banking and Insurance Regulatory Commission(CBIRC)is conducive to the coordination of bank-insurance cross-shareholding policies.Third,under the influence of financial liberalization in other countries in the world,many banks and life insurance companies have developed from business cooperation to cross-shareholding in China.And it has been initially found that bankinsurance cross-shareholding may cause reduce the solvency risk and financial risk of life insurance companies by analyzing the risk changes of life insurance companies before and after cross-shareholdingThe third chapter is the risk transfer research of bank-insurance crossshareholdings: based on the risk spillovers.The risk spillovers of the insurance industry and the banking industry to the financial system,and the mutual risk spillovers between the insurance industry and the banking industry are measured by ?CoVaR method.The research shows that: about the risk spillover effect of the insurance industry and the banking industry on the financial system,the risk spillover level of the banking industry on the financial system is higher,and the gap between the insurance industry and the banking industry on the risk spillover level of the financial system is gradually narrowing.The asymmetry of the mutual risk spillover effect between insurance and banking is obvious,and the risk spillover level of the banking industry to the insurance industry is higher.The gap between the mutual risk spillover level of the insurance industry and the banking industry is gradually narrowing.The above conclusions show that the banking industry has a higher risk spillover effect.It has great practical significance to study the impact of bank-insurance cross-shareholdings on the risks of life insurance companies.The fourth chapter is the research on the impact of bank holdings on the risks of life insurance companies.Empirically test the impact of large commercial bank holdings on the risks of small and medium life insurance companies from the aspects of solvency risk and financial risk,and use the PSM method to find a suitable control group for the bank holding life insurance companies.The research shows that: bank holdings will significantly improve the solvency of life insurance companies,but it was not significantly impact on the financial risks of life insurance companies.And further analysis shows that the impact mechanism is insurance business concentration,premium growth rate and the insurance business costs.The fifth chapter is the research on the impact of life insurance companies' holding banks on their own risks.Empirical test of the impact of life insurance company holding banks on their own risks from three aspects: the proportion of life insurance company holding banks,the number of life insurance company holding banks and the market value of life insurance company holding banks.The robust test is using Heckman's twostep method,reverse causal identification and dynamic panel model.The research shows that: The number of life insurance company holding banks and the market value of life insurance company holding banks have no significant impact on their own risks.The proportion of life insurance company holding banks has significantly positive impact on the systemic risk of life insurance.And further analysis found that the impact mechanism is increasing the proportion of non-core business income of life insurance.The six chapter is the research conclusions and policy recommendations.Based on the research contents of the previous chapters,we summarize the main conclusions of this paper.And give the following recommendations: promote the development of bank-insurance cross-shareholdings,strengthen the supervision of bank-insurance cross-shareholdings,and strengthen prevention of life insurance company' risks.The innovations of this article are mainly reflected as follows: Firstly,the topic has important theoretical and practical significance.According to the current situation of bank-insurance cross-shareholding,the study analyzes the impact of bank-insurance cross-shareholdings on the risk of life insurance companies,which helps to broaden the equity integration of financial institutions and enriched the research of life insurance companies' risk.Secondly,the research perspective is novel and the analysis is comprehensive.The study analyzes the bank-insurance cross-shareholding on the risks of life insurance companies from two aspects,bank holding life insurance company and life insurance company holding bank,both considering the individual risk and systemic risk of life insurance companies.Finally,the study provides policy recommendations for the CBIRC to strengthen supervision in the context of mixed operations.These recommendations are to standardize the bank-insurance cross-shareholding system and to strengthen the supervision of cross-shareholdings.Although the study has researched the impact of bancassurance cross-shareholdings on the risks of life insurance companies from multiple perspectives,there exist the following two shortcomings: First,the research sample is relatively small,there are only four listed life insurance companies in China.Second,the study only considering three aspects risk of life insurance companies when research the impact of bank-insurance cross-shareholding on life insurance companies,which need to be further expanded.