Finance and Economics Discussion Series (FEDS)
August 2000
The Integration of the Financial Services Industry: Where are the Efficiencies?
Allen N. Berger
Abstract:
We examine the efficiency effects of the integration of the financial services industry and suggest directions for future research. We also propose a relatively broad working definition of integration and employ U.S. and European data on financial service industry M&As to illustrate several types of integration. The analysis suggests that there is a large potential for efficiency gains from integration, but only a relatively small part of this potential may be realized. Integration appears to bring about larger revenue efficiency gains than cost efficiency gains, and most of the gains appear to be linked to benefits from risk diversification.
Full paper (1601 KB Postscript)Keywords: Banks, insurance, securities firms, mergers, efficiency, international finance
PDF: Full Paper
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