Diversification, size and risk: The case of bank acquisitions of nonbank financial firms

We investigate the risk effects of bank acquisitions of insurance companies and securities firms between 1991 and 2012 using a newly constructed dataset of M&A deals. We examine risk changes before and after deal announcements by decomposing risk into systematic and idiosyncratic components. Subsequently, we investigate the relationship between risk and diversification by modelling the determinants of risks. We find that bank combinations with securities firms yield higher risks than combinations with insurance companies. Bank size is an important and consistent determinant of risk whereas diversification is not. Our results inform the continuing debate on diversification versus functional separation of bank activities.

Cross-Industry Product Diversification and Contagion in Risk and Return: The Case of Bank-Insurance and Insurance-Bank Takeovers

We investigate the impact of domestic/international bancassurance deals on the risk-return profiles of announcing and non-announcing banks and insurers within a GARCH model. Bank-insurance deals produce intra- and inter-industry contagion in both risk and return, with larger deals producing greater contagion. Bidder banks and peers experience positive abnormal returns, with the effects on insurer peers being stronger than those on bank peers. Insurance-bank deals produce insignificant excess returns for bidder and peer insurers and positive valuations for peer banks. Following the deal, the bank bidders’ idiosyncratic (systematic) risk falls (increases), while insurance bidders exhibit a lower systematic risk and maintain their idiosyncratic risk.

Separating the effects of ethnicity and socio-economic status on sleep practices of 6- to 7-month-old infants

Infant sleep undergoes significant re-organization throughout the first 12 months of life, with sleep quality having significant consequences for infant learning and cognitive development. While there has been great interest in the neural basis and developmental trajectories of infant sleep in general, relatively little is known about individual differences in infant sleep and the socio-economic and cultural sources of that variability. We investigated this using questionnaire sleep data in a large, unique multi-ethnic sample of 6-7 month-olds (n=174), with families from South Asian ethnic groups in the UK (Indian, Pakistani and Bangladeshi) being especially well represented. Consistent with previous data from less variable samples, no effects of SES on sleep latency or nocturnal sleep duration emerged. However, perinatal risk factors and ethnic differences did predict daytime sleep, sleep fragmentation and sleep-onset time. While these results should be interpreted with caution due to several limitations, they likely demonstrate that even when socio-economic status and ethnicity are much less confounded than in previous studies, they have a surprisingly limited impact on individual differences in sleep patterns in young infants.