학회 소식
공지사항
[2005년 제 2차] Economies of Scope in Financial Services: A DEA Boo
작성자 : 관리자
조회수 : 1038
게시일 :
2005-06-03
This paper investigates economies of scope in the U.S. insurance industry over the period 1993-1997. We test two primary hypotheses; the conglomeration hypothesis, which holds that operating a diversity of business can add value by exploiting cost and revenue scope economies, versus the strategic focus hypothesis, which holds that firms can best add value by focusing on core businesses and core competencies. We analyze whether it is advantageous for firms to offer both life-health and property-liability insurance or to specialize in one of the major industry segments. We test for economies of scope by estimating technical, cost, and revenue efficiency utilizing data envelopment analysis (DEA). An innovative feature of the analysis is the estimation of cross-frontier efficiency, where each group of firms (diversified firms and specialists) is compared to a reference set consisting of the other type of firm, enabling us to determine whether the specialization or conglomeration is the dominant strategy for each firm in the sample. The results provide only weak evidence for the existence of economies of scope in the U.S. insurance industry. Although diversified firms dominate specialists in the production of diversified firm output vectors in terms of revenue efficiency for both life-health and propertyliability insurance, specialist firms dominate diversified firms for the production of specialist output vectors in revenue efficiency and also dominate diversified firms in cost efficiency for property-liability output vectors. Overall, the results reinforce the findings of most of the recent literature on diversification. –In general, strategic focus appears to be a better strategy than conglomeration.