The Risk Effects of Bank Diversification into Bancassurance

This chapter outlines the methodology taken to investigate the potential risk effects of UK banking institutions' involvement in life insurance. The previous chapter identified two main approaches in the US literature on bank diversification and risk: portfolio and merger simulations. The approach taken in this chapter adopts a merger simulation framework. The first part of the chapter describes the steps followed in order to undertake merger simulations and the second part outlines our main findings.