Bancassurance Economic Analysis

Facing the problem of the relations of low-level cooperation between commercial banks and insurance companies,the article intends to discuss deep level bancassurance from the perspective of micro-entity.Based on the Principal-Agent theory,through the establishment of individual utility function with insurance company as client,the bank acting as agent, discuss the cooperation action of bank and insurance.Not considering of cross-shareholding, the first part discusses the solutions of condition of static cooperation equilibrium with basic model and the necessary conditions of cooperative equilibrium solution in repeat game involving in discount.Considering cross-shareholding structure,the second part to introduce the necessary conditions of cooperative equilibrium solution in static game and repeat game, and the influence of cross-shareholding in bancassurance.This article tries to answer the question:as a policy of cross-shareholding arrangement,can it help resolve the problem of bancassurance's long-term cooperation to ensure bank and insurance company gain more revenue?The thesis gets conclusion that:1,Without shareholding restriction,while bank and insurance tend to cooperate,obtain incentive discount h:M≤h≤K;Under shareholding restriction,while bank and insurance tend to cooperate,obtain incentive discount h: P≤h≤R,comparing the results under different conditions,we can indicate that,the latter gets wider range of Cross-shareholding and batter cooperation.2,There is a critical value of discount coefficient for both bank and insurance:δ~*_I,δ~*_B.Whileδ_I≥δ~*_I,δ_B≥δ~*_B satisfied simultaneously,there is a cooperative equilibrium solution,and,under cross-shareholding, both bank and insurance,their considering discounts will increase no matter who get more shareholding.These hypothesises are also supported by many realistic cases.