There is significant spatial stratified heterogeneity in the operating conditions of property insurance industry in China. What is more, China's property insurers have carried out a rapid geographic expansion in recent years, then, how does the geographic expansion affect the profit of property insurers? On the basis of the panel data of China's 64 property insurers during the period from 2006 to 2015, this paper estimates the the profit efficiency for each property insurer using the geographically-weighted method. Moreover, through the regression analysis with five geographical expansion measures, we draw the following conclusions. (1) Geographical expansion is significantly and positively related to the profitability and more than 60% of the positive correlation attribute to the larger possibilities of higher profitability insurers to carry out geographical expansion. (2) Geographical expansion also plays a positive role in property insurers' profitability to some extent. Other things being equal, the number of the provincial-level regions where an insurer operates increases by 10, the premium income share from the provincial-level regions other than its headquarters-located region increases by 10 percentage points, the concentration ratio of the premium income across provincial-level regions decreases by a unit of standard deviation, and the average distance between the headquarters and its branches increases by 1%, the profitability of the property insurer will increase by 2%, 1%, 2% and 1% of a unit of standard deviation in the sample, respectively. (3) It is difficult to reach a conclusion on the positive impact of geographical expansion on profitabilitywhen the profit efficiency is estimated by ordinary methods.
The regional development research on commercial banks has always been the focus of financial geography research. At present, there is still debate on whether the geographical decentralization level of commercial bank loan can positively influence bank performance. This paper uses the loan data of 13 listed commercial banks in China releasing to each province during 2007-2013 to analyze the loan releasing geographical distribution characteristics of large-sized commercial banks and small and medium-sized commercial banks and the geographic variation trend of non-performing loans. On such basis, it uses stochastic frontier analysis (SFA) and the basic model of Battese and Collie (1995) to build the trans-log profit function model to conduct empirical analysis of the influence of geographical decentralization level of commercial bank loan on the efficiency of bank profits. Research results show that: (1) Increasing the geographical decentralization level of loan can boost the revenue and profit efficiency for commercial banks in the process of banking operation; (2) Large-sized commercial banks, due to the effect of national policies, cover broader loan releasing areas, and the loan releasing proportion in the central and western regions is significantly higher than that of the small and medium-sized commercial banks, and the average profit efficiency has always been higher than that of the small and medium-sized commercial banks. However, in recent years, with the gradually increasing geographical decentralization level of small and medium-sized commercial banks loan, the gap of profit efficiency between the two has been narrowed; (3) At present, the loan business of some small and medium-sized commercial banks in China still belongs to the relationship loan, and raising the geographical decentralization level of loan will lower their profit efficiency. Therefore, the diversified business operation should be carefully handled and cannot blindly follow it.
Deng SE, ElyasianiE.Geographic diversification, bank holding company value, and risk. Journal of Money, , 2008, 40(6): 1217-1238.
Berger AN, DeYoung R. The effects of geographic expansion on bank efficiency. , 2001, 19(2/3): 163-184.年度引用
Brickley JA, Linck JS, Smith C W Jr. Boundaries of the firm: Evidence from the banking industry. , 2003, 70(3): 351-383.
<h2 class="secHeading" id="section_abstract">Abstract</h2><p id="">Agency theory implies that asset ownership and decision authority are complements. Using 1998 data from Texas commercial banks, we test whether the likelihood of local ownership of bank offices increases with the importance of granting local managers greater decision authority (for example, due to location or customer base). Our empirical evidence is consistent with this hypothesis. It suggests that complementarities between strategy and organizational structure can foster differentiation among firms in terms of location, customers, and products. It also supports the growing view that small locally-owned banks have a comparative advantage over large banks within specific environments.</p>
HaydenE, PorathD, WesternhagenN.Does diversification improve the performance of German banks? Evidence from individual bank loan portfolios. , 2007, 32(3): 123-140.http://link.springer.com/article/10.1007/s10693-007-0017-0
Should banks be diversified or focused? Does diversification indeed lead to increased performance and therefore greater safety on the part of banks as traditional portfolio and banking theory would suggest? Recently, Acharya et al. (J Bus, 79:1355–1412, 2006) have found that for Italian banks the answers to these questions depend on the level of risk that a bank has taken. In this paper we investigate whether this result is robust to the choice of the sample and to the calculation of the risk variable. To this end we use a unique data set of the individual bank loan portfolios of 983 German banks for the period from 1996 to 2002 and calculate a Value-at-Risk based risk variable. We then investigate the link between banks’ profitability and their portfolio diversification across different industries, broader economic sectors and geographical regions. We find little evidence of large performance benefits associated with diversification: For the majority of our data, diversification tends to be associated with reductions in bank returns, even after controlling for risk. Only in a few cases (e.g., high-risk banks and industrial diversification) do we find statistically significant positive relationships between diversification and bank returns. Our findings contradict both the empirical findings of Acharya et al. (J Bus, 79:1355–1412, 2006) and the theoretical findings of Winton (Don’t put all your eggs in one basket? Diversification and specialization in lending. Working Paper No. 00-16, University of Minnesota, 1999).
Schmid MM, WalterI.Do financial conglomerates create or destroy economic value? , 2009, 18(2): 193-216.http://www.sciencedirect.com/science/article/pii/S1042957308000326
This paper investigates whether functional diversification is value-enhancing or value-destroying in the financial services sector, broadly defined. Based on a U.S. dataset comprising approximately 4060 observations covering the period 1985鈥2004, we report a substantial and persistent conglomerate discount among financial intermediaries. Our results suggest that it is diversification that causes the discount, and not that troubled firms diversify into other more promising areas. In addition, the discount applies to all financial services activity-areas with the exception of investment banking and is stable over different combinations of financial activity-areas with the exception of commercial banking units combined with insurance companies and/or investment banking activities.
Goetz MR, LaevenL, LevineR.Identifying the valuation effects and agency costs of corporate diversification: Evidence from the geographic diversification of US banks. , 2013, 26(7): 1787-1823.http://rfs.oxfordjournals.org/content/26/7/1787
This paper assesses the impact of the geographic diversification of bank holding company (BHC) assets across the United States on their market valuations. Using two new identification strategies based on the dynamic process of interstate bank deregulation, we find that exogenous increases in geographic diversity reduced BHC valuations. We also find that the geographic diversification of BHC assets increased insider lending and reduced loan quality. Taken together, these findings are consistent with theories predicting that geographic diversity intensifies agency problems.
MilloG, CarmeciG.Non-life insurance consumption in Italy: A sub-regional panel data analysis. , 2011, 13(3): 273-298.http://link.springer.com/article/10.1007/s10109-010-0125-5
We analyze the consumption of non-life insurance across 103 Italian provinces in 1998鈥2002 in order to assess its determinants, in the light of the empirical literature. Using sub-regional data, we overcome an important limitation of cross-country analyses, i.e. the systemic heterogeneity due to country-specific characteristics. Individual heterogeneity is accounted for through panel data techniques. However, considering spatial units within a single market raises issues of cross-sectional or spatial dependence, either due to common nationwide and/or regional factors or to spatial proximity. We carefully assess spatial dependence, employing recent diagnostic tests, finding out that the regressors included in our specification successfully account for spatial dependence. Insurance turns out to depend on income, wealth and some demographics, as already established, but also on trust, judicial efficiency and borrowing conditions. These findings help in explaining the gap between Central-Northern Italy and the south of the country.
Wang JF, Li XH, ChristakosG, et al.Geographical detectors-based health risk assessment and its application in the neural tube defects study of the Heshun Region, China. , 2010, 24(1): 107-127.http://dl.acm.org/citation.cfm?id=1744690
Physical environment, man‐made pollution, nutrition and their mutual interactions can be major causes of human diseases. These disease determinants have distinct spatial distributions across geographical units, so that their adequate study involves the investigation of the associated geographical strata. We propose four geographical detectors based on spatial variation analysis of the geographical strata to assess the environmental risks of health: the risk detector indicates where the risk areas are; the factor detector identifies factors that are responsible for the risk; the ecological detector discloses relative importance between the factors; and the interaction detector reveals whether the risk factors interact or lead to disease independently. In a real‐world study, the primary physical environment (watershed, lithozone and soil) was found to strongly control the neural tube defects (NTD) occurrences in the Heshun region (China). Basic nutrition (food) was found to be more important than man‐made pollution (chemical fertilizer) in the control of the spatial NTD pattern. Ancient materials released from geological faults and subsequently spread along slopes dramatically increase the NTD risk. These findings constitute valuable input to disease intervention strategies in the region of interest.
Wang JF, Zhang TL, Fu BJ.A measure of spatial stratified heterogeneity. , 2016, 67: 250-256.http://www.sciencedirect.com/science/article/pii/S1470160X16300735
Spatial stratified heterogeneity, referring to the within-strata variance less than the between strata-variance, is ubiquitous in ecological phenomena, such as ecological zones and many ecological variables. Spatial stratified heterogeneity reflects the essence of nature, implies potential distinct mechanisms by strata, suggests possible determinants of the observed process, allows the representativeness of observations of the earth, and enforces the applicability of statistical inferences. In this paper, we propose a q -statistic method to measure the degree of spatial stratified heterogeneity and to test its significance. The q value is within [0,1] (0 if a spatial stratification of heterogeneity is not significant, and 1 if there is a perfect spatial stratification of heterogeneity). The exact probability density function is derived. The q -statistic is illustrated by two examples, wherein we assess the spatial stratified heterogeneities of a hand map and the distribution of the annual NDVI in China.
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People's Bank ofChina. Beijing: China Financial Publishing House, 2016.
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Cummins JD, Weiss MA.Analyzing firm performance in the insurance industry using frontier efficiency and productivity methods//Dionnes G. Handbook of Insurance. , 2000.
Cummins JD, Weiss MA.Analyzing firm performance in the insurance industry using frontier efficiency and productivity methods//Dionnes G. Handbook of Insurance. 2nd ed. , 2013.
ElingM, LuhnenM.Frontier efficiency methodologies to measure performance in the insurance industry: Overview, systematization, and recent developments. Geneva Papers on Risk and Insurance-Issues and , 2010, 35(2): 217-265.
Cummins JD, Weiss MA, ZiH.Organizational form and efficiency: The coexistence of stock and mutual property-liability insurers. , 1999, 45(9): 1254-1269.http://dl.acm.org/citation.cfm?id=333425
This article introduces a new approach, cross-frontier analysis, for estimating the relative efficiency of alternative organizational forms in an industry. The technique is illustrated by analyzing a sample of stock and mutual property-liability insurers using nonparametric frontier efficiency methods. Cross-frontier analysis measures the relative efficiency of each organizational form by computing the efficiency of each stock (mutual) firm relative to a reference set consisting of all mutual (stock) firms. We test agency-theoretic hypotheses about organizational form, including the managerial discretion and expense preference hypotheses. The results indicate that stocks and mutuals are operating on separate production and cost frontiers and thus represent distinct technologies. Consistent with the managerial discretion hypothesis, the stock technology dominates the mutual technology for producing stock outputs and the mutual technology dominates the stock technology for producing mutual outputs. However, consistent with the expense preference hypothesis, the stock cost frontier dominates the mutual cost frontier. Our findings thus suggest a richer interpretation of organizational form than provided by previous researchers.
Tabak BM, Miranda RB, Fazio DM.A geographically weighted approach to measuring efficiency in panel data: The case of US saving banks. , 2012, 37(10): 3747-3756.http://www.sciencedirect.com/science/article/pii/S0378426613002410
The objective of this article is to discuss a new approach to control for the environment when one estimates efficiency by the stochastic frontier model. By introducing geographical weights and estimating local frontiers for each US saving bank for 2001-09, we find that bank technical performance is higher for most banks in comparison to a fixed-effects approach. This result highlights the importance of explicitly considering local environment and constraints while analyzing banks' behavior. All in all, this model has been proved very promising and viable for future empirical studies.
Battese GE, Coelli, TJ.Frontier production functions, technical efficiency and panel data: With application to paddy farmers in India. , 1992, 3(1/2): 153-169.http://onlinelibrary.wiley.com/resolve/reference/XREF?id=10.1007/BF00158774
Frontier production functions are important for the prediction of technical efficiencies of individual firms in an industry. A stochastic frontier production function model for panel data is presented, for which the firm effects are an exponential function of time. The best predictor for the technical efficiency of an individual firm at a particular time period is presented for this time-varying model. An empirical example is presented using agricultural data for paddy farmers in a village in India.