Comment on Hancock, Humphrey, and Wilcox

Article Abstract:

The issue of whether consolidation of electronic funds transfer operations of banking institutions involved in bank branching reduces production costs is subject to debate. An analysis of the Federal Reserve's experience with its Fedwire electronic payment system over the period 1979 to 1996 shows that large economies of scale and technical change play important roles indeed reduce the cost of operating such systems. However, caution must be observed in considering economies of scale and technical change in terms of practical business planning and decision making.

Commercial Banking, Electronic computers, Electronic Computer Manufacturing, Functions related to deposit banking, Electronic Banking Svcs, Electronic Funds Transfer Systems, Finance, United States. Federal Reserve Board, Technology application, Electronic banking, Branch banks

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Comments on Hughes, Lang, Mester, and Moon and Cummins, Tennyson, and Weiss

Article Abstract:

Empirical evidence shows that consolidation improves the financial performance and efficiency of the banking and life insurance industries. In the case of bank holding companies, interstate branching improves market value efficiency and production efficiency while reducing insolvency risk. Life insurance companies that have been acquired also experience significant efficiency gains, more than firms that have not been involved in acquisitions or mergers. In addition, consolidation brings social benefits to both banks and life insurance firms.

Life Insurance, Direct Life Insurance Carriers, Analysis, Insurance industry, Life insurance industry, Industrial efficiency, Economic efficiency

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Intra-industry signals embedded in bank acquisition announcements

Article Abstract:

The number of bank acquisition and mergers has considerably increased over the years, as financial service firms adopt alternative means of increasing economies of scale. Analysis conducted on bank acquisition announcements made from 1983 to 1996 suggest that these activities generate distinct effects across industrial segments. Specifically, the valuation effects of rival bank portfolios are positively related to the valuation effects of target banks.

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