| Summary: | 碩士 === 國立高雄第一科技大學 === 風險管理與保險所 === 90 === A Research of the Financial Institution
Diversification and Integration
Abstract
In the financial service industry, there have been so far a lot of limitations on managing business of banking, insurance, and security simultaneously. However, due to the free competitions of the financial institutions in recent years, the profit decrease, the risk rises. Therefore, most of the financial institutions try to diversify their management running business to decrease the risk and raise the profit. By diversifying their management running business, they expect to explore the scope of the business to achieve scope economy. The data in this paper are drawn from the financial institutions with different characteristics, mainly banking, insurance and security business in Taiwan. Principal component analysis is adopted in this paper to help analyze and compare the advantages and features of the four different businesses in the whole financial institution field. Mean-variance method and correlation analysis are used to discuss the effects of diversification.
Based on the results of this research, the following conclusions are reached:
1.Based on the mean-variance theory, it is obvious that the general risk of combined business is far less than the total of individual risk. Thus the financial institutions can benefit by diversification.
2.Regarding to correlation analysis, diversification effect to the weighted return on asset is not insignificant, but positively influence on total revenue and total assets.
3.Principal component analysis shows the performance of security business exceeds the others. To include the business of security while considering combination of business is then recommended.
4.The business of life insurance excels others in the growth stage, which implies that if one engages in the life insurance business, he or she can accumulate his or her fortune before long.
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