| Summary: | 碩士 === 國立中正大學 === 財務金融所 === 95 === The passage of the Financial Services Modernization Act of 1999 in United States paves the best and nature way for financial holding company (FHC) to exert their diversification benefit. We will investigate the impact of FHC’s diversification on cost efficiency, risk and risk-adjusted performance from 2002:Q2 to 2005:Q4. In this paper, we utilize FHC’s different subsidiaries income sources and equity investment in different subsidiaries to construct income and equity diversification index respectively.
Our findings suggest that income and equity diversification both have positively significant impact on cost efficiency and risk-adjusted performance and negatively significant related with risk measures. These imply the diversification benefits of FHC could exist. Further comparing to another banking structure, universal banks in France, FHCs have more profound diversification benefits than universal banks. With respect to FHCs’ scales effect on diversification, our evidence is in favor of larger FHCs’ diversification benefits other than smaller FHCs.
|
|---|
