Bancassurance And Analysis Of Its Effect

During 20 century 80's in developed countries, banking and insurance penetrated mutually, and the appearance of Bancassurance is one of representations of this trend. Because of cost saving and resources-shared advantages, Bancassurance was applied by most developed countries. In Europe most great banks have already set down development strategy of Bancassurance, for example HSBC and Deutsche Bank have framed their plan on Bancassurance. In China in recent years Bancassurance developed fast but still has a long way to go. On these backgrounds the author has a study on it and draws some conclusion. On the base of general study on Bancassurance, this article uses transaction cost theory to analyze the problem of Bancassurance and compares the cost of surrogate, Bancassurance, distribution agreement and financial service group. In the last part the article give some suggestion to the development of China's Bancassurance. There are three parts in this article. The first part: Meanings of Bancassurance, including its meanings, stages of development, causes, advantages and development situation. Bancassurance has three development stages and four modes that are distribution agreement, strategic alliance, joint venture, and financial service group. There are many causes that impetus its development and this article mainly discusses from four angles that are the freedom of financial, the worse condition of banking and insurance industry, the great advantages of Bancassurance, and the government supporting policy. At last, the article discusses the development situation. In Europe Bancassurance is very ordinary and is in the advanced stage. But in Asia Bancassurance is in the low-grade, the scale is small and the surrogate mode is still the main distribution channel. The second part: Analysis of Bancassurance transaction cost. In this part the article firstly discusses the primary transaction cost theory of Coase and Williamson, and then compares the transaction cost of three modes that are surrogate, distribution agreement and financial service group, and at last the article draws some conclusion. According to the definition of Coase, R, H, transaction cost has three levels: The cost, which happens in preparation stage, mainly includes the cost of collecting information, the cost of finding the latent consume, and the cost of finding the reasonable market price. The second part cost includes the cost of negotiation, the cost of bargaining, and the cost of signing contact. The third part cost includes the uncertainty cost and the cost of avoiding risk. Oliver E Williamson analyzes transaction cost theory deeply based on the study of Coase and regards that bounded rationality and speculation as the deciding factors. Furthermore he uses three tools which are specific assets, uncertainty and transaction frequency to analyze the problem of transaction cost. This article attempts to use the above theory to analyze the transaction cost of Bancassurance, distribution agreement mode, surrogate mode, and financial service group mode. The actions of three sides are synthesized in following sheet. In the sheet "+"stands for existence and"—"stands for inexistence, "S"stands for surrogate mode, "D"stands for distribution agreement mode, and "F"stands for financial service group mode.Surrogate has limited rationality and tendency to speculate, and transaction frequency is high. So in this mode the market is competitive, and their interest connection is loose. Both sides adopt the strategy of singing contract separately, and both are finding the next partners constantly. In this mode transaction cost include following cost: the cost of bargaining, the cost of avoiding risk and the cost of surrogate education, and etc. In the distribution agreement mode, the transaction cost includes following cost: the cost of collecting information of market, the cost of frequent transaction, the cost of correcting target difference, the cost of prevent property, and etc. Comparing above two modes, the transaction cost of financial service group is little. Their trustworthy connection can reduce the cost of avoiding risk; their deeds that both sides meet their engagement can reduce the cost of supervising the implement of the contract and the cost of correcting the target; their cooperation relationship can reduce the cost of vicious competition. The second part conclusion: the financial service group is the mode that reduces the transaction cost most because of their trustworthy connection and other factors, and the surrogate mode is the one that increase the most transaction cost because of loose connection and speculation deeds. The third part: The development of Bancassurance in China and policy proposal. This part firstly shows the Bancassurance development in China. The existing problems are mainly following: the increasing service fee, the...