Literature Review Carrow Kenneth A. and Heron R. Capital Market Reactions To The Passage of The

CHAPTER III
Literature Review
Carrow Kenneth A. and Heron R. ―Capital market reactions to the passage of the
Financial Services Modernization Act of 1999‖. The Quarterly Review of Economics and
Finance 42 (2002) The authors investigate how the passage of the Financial Services
Modernization Act of 1999 (FMA) affected stock prices of banks, thrifts, finance
companies and insurance companies. The study looks at stock excess returns across
sectors and company size. The idea is that the passage of the FMA opens doors for
potential mergers and consolidations across banking, financial and insurance sectors,
translating into abnormal positive returns for businesses that are the likely candidate for
mergers and consolidation. The results of the study suggest that the largest returns to the
FMA passage were realized by large investment banks and insurance companies. The
stock prices of banks, both small and large, seemed to be unaffected by the new
legislation while thrifts, finance companies and foreign banks lost value.
Hogan, John D (2001). ―Financial Services Reform: The Gramm-Leach-Bliley Act

and its implications for insurance‖, Journal of Financial Service Professionals, January
2001. In this paper, the author contends that the impact of the GLB Act on the insurance
industry is unclear. It had been widely assumed that the banking industry would quickly
expand into non-banking activities, as synergies could be expected from the large bank
customer information base and frequent contacts with customers. However, this quick
response has not taken place, partly because of perception of risk in the insurance
business.The author also cites a research study by The Federal Reserve Bank of Atlanta
that suggests that bank holding companies will add insurance products to their lines of
business for sound reasons such as: 1) small increment costs involved, 2) the presence of
existing customer relationships, 3) revenue diversification, 4) absence of interest rate risk
in insurance compared with loans and 5) banks‘ web-based marketing capability.
McDaniel, David (1995): ―Agents‘ worst nightmare: Banks are gaining the edge to sell
insurance in a big way‖. Best’s Review [Property/Casualty], The article explains that
insurance agents are afraid of banks cutting into their business as they have in Europe
where banks are far more efficient than agents. The article lays out how to make the
proposed legislation ineffective, by warning of unsubstantiated tie-ins and bank coercion,
proposing 10-day waiting periods, state legislation, and tough fire walls The attitudes,
most often negative, are mirrored through low patronage of insurance services. It
discusses such social-cultural factors that account for these attitudes and what role
marketing strategies can play to change such negative tide. Drawing from theoretical
foundation, an empirical survey was conducted among 392 members of the public—
insuring and non-insuring—to gauge their awareness level and general attitudes towards
insurance companies and their operations. The findings present different demographical
factors and their attitudes towards insurance companies and their services. It is expected
that findings from such survey would constitute vital input for insurers in designing
marketing strategies that would further stimulate and boost patronage and perception of
insurance services. Key words: insurance, attitude, Nigeria, demography, marketing,
strategies African Journal of Accounting, Economics, Finance and Banking Research
Tajudeen Olalekan Yusuf,
Ayantunji Gbadamosi, & Dallah Hamadu The demand for Medicliam Insurancein a
country may be affected by the unique culture of the country to the extent that it affects
the population‗s risk aversion (Douglas and Wildavski, 1982). Henderson and Milhouse
(1987) argue that an individual‗s religion can provide an insight into the individual‗s
behaviour; and understanding religion is an important component of understanding a
nation‗s unique culture. Also, Zelizer (1979) notes that religion historically has provided
a strong source of cultural opposition to Medicliam Insuranceas many religious people
believe that a reliance on Medicliam Insuranceresults from a distrust of God‗s protecting
care. Until the nineteenth century, European nations condemned and banned Medicliam
Insuranceon religious grounds. Zelizer also states that religious antagonism to Medicliam
Insurancestill remains in several Islamic countries. In similar vein, Wasaw and Hill
(1986) tested the effect of Islam on Medicliam Insuranceconsumption using an
international data set. The results of their study indicate that, ceteris paribus, consumers
in Islamic nations purchase less Medicliam Insurancethan those in non-Islamic nations.
This becomes more evident in the fact that there is comparatively very low ratio of
Muslims in developed countries with the majority residing in medium to low human
development countries. From the thirty-five low human development countries as
defined by the Human Development Report (2004), seventeen have a majority Muslim
population and a further five have a Muslim population of over 20 percent. Muslims
around the world are commonly faced with low-income levels, and African Journal of
Accounting, Economics, Finance and Banking Research Tajudeen Olalekan Yusuf,
Ayantunji Gbadamosi, & Dallah Hamadu.

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CHAPTER III

Hogan, John D (2001). ―Financial Services Reform: The Gramm-Leach-Bliley Act

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