Measuring the interconnectedness among the top players of the four financial sectors (banks, brokerage firms, insurance companies, and mutual funds) in the Philippines for the years 1995-2012

• Main Authors: Dayrit, Mach Josh M., Liwanag, Gabriel Luis L., Matias, Marjorie May C.
• Format: text
• Language: English
• Published: Animo Repository 2013
• Subjects: Financial institutions > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18322
• Institution: De La Salle University

The researchers measure the interconnectedness among banks, brokerage firms, insurance companies, and mutual funds in the Philippines to determine if it exists in our financial system. By applying simple linear regression and Granger causality tests to the annual equity returns of the top player institutions in each sector, the researchers find that interconnectedness do not exist between them. Since interconnectedness is a very new concept which was brought about by the recent 2008 Subprime Mortgage Crisis, it is less likely to be existing in a very young financial system. In conclusion, banks, brokerage firms, insurance companies and mutual funds are not interconnected for the following reasons: (1) Philippine financial system is young (2) has low hedging and leverage relative to financial systems that exhibits interconnectedness (3) there is a large difference in the scale of operations and (4) there are different regulators for each sector working independently.