Bidder returns in bancassurance mergers: Is there evidence of synergy?

We provide evidence on the potential for bidder wealth gains in bancassurance mergers by examining a sample of such mergers in the United States and abroad. These combinations are expected to produce positive wealth gains if there are synergies between these two types of financial firms. We find positive bidder wealth effects that are significantly related to economies of scale (as measured by the size of the target relative to the bidder), potential economies of scope, and the locations of the bidders and targets. These results suggest that the bancassurance architectural structure for financial firms does offer some benefits and thus may become more prominent in future years.