A Quantitative Analysis of Investment within China's Life Insurance Industry: A Dilemma for China's Insurance Regulators

Posted: 16 Feb 1999

See all articles by Qixiang Sun

Qixiang Sun

Beijing University

John W. Maxwell

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy; Indiana University, Department of Economics; Richard Ivey School of Business

Date Written: January 1999

Abstract

Successful investment is the life-blood of any nation's life insurance industry. As such the industry relies heavily on well developed capital markets. In turn, a strong insurance industry can have a substantial and positive impact on capital market development. At the present time, China's insurance and capital markets are underdeveloped. Chinese insurance companies are legally restricted from participating in the nation's underdeveloped and highly speculative capital markets. On the one hand, the insurance industry needs to be freed from restrictive investment laws in order to diversify their investment portfolios. On the other hand, a simple liberalization of insurance laws governing investment will not allow for successful portfolio diversification because of underdeveloped and highly speculative capital markets. We examine this dilemma in detail and suggest a package of reforms designed to strengthen China's insurance industry and its capital markets. Our reform proposals are intended to encourage both investigation and debate (domestic and international) into reforms necessary for the development and strengthening of China's life insurance industry.

JEL Classification: P2, P3, P34, G22

Suggested Citation

Sun, Qixiang and Maxwell, John W., A Quantitative Analysis of Investment within China's Life Insurance Industry: A Dilemma for China's Insurance Regulators (January 1999). Available at SSRN: https://ssrn.com/abstract=147205

Qixiang Sun

Beijing University ( email )

School of Economics
Beijing
China

John W. Maxwell (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Department of Business Economics and Public Policy
Kelley School of Business, Indiana University
Bloomington, IN 47405
United States
812-855 9219 (Phone)
812-855 3354 (Fax)

HOME PAGE: http://johnwmaxwell.com

Indiana University, Department of Economics ( email )

Wiley Hall
Bloomington, IN
United States

Richard Ivey School of Business ( email )

The University of Western Ontario
1151 Richmond Street North
London, Ontario N6A3K7
Canada
5198502439 (Phone)
5198502306 (Fax)

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