Foreign Ownership and Non‐Life Insurer Efficiency in the Japanese Marketplace

32 Pages Posted: 28 Mar 2012

See all articles by Li‐Ying Huang

Li‐Ying Huang

affiliation not provided to SSRN

Yu-Luen Ma

Illinois State University - Katie Insurance School

Nat Pope

Illinois State University

Date Written: Spring 2012

Abstract

Traditional shareholding patterns in Japan have experienced significant change beginning in the early 1990s. Since that time, foreign institutional shareholding has increased significantly largely at the expense of domestic financial institution ownership. This article examines whether these changes in ownership patterns share a relationship with insurer performance in the non‐life insurance market. Using data from 1992 to 2005, we assess performance in terms of efficiency measures using data envelopment analyses (DEA) techniques. Our results show that higher levels of domestic financial institution ownership in Japan are associated with insurer inefficiency. Relative to that relationship, the foreign ownership–insurer efficiency relationship is found to be positive. Additionally, we find that the disparity between those relationships has become more acute since 2001 when the Japanese non‐life insurance market experienced significant consolidation.

Suggested Citation

Huang, Li‐Ying and Ma, Yu-Luen and Pope, Nat, Foreign Ownership and Non‐Life Insurer Efficiency in the Japanese Marketplace (Spring 2012). Risk Management and Insurance Review, Vol. 15, Issue 1, pp. 57-88, 2012, Available at SSRN: https://ssrn.com/abstract=2030144 or http://dx.doi.org/10.1111/j.1540-6296.2011.01202.x

Li‐Ying Huang (Contact Author)

affiliation not provided to SSRN

No Address Available

Yu-Luen Ma

Illinois State University - Katie Insurance School ( email )

Normal, IL 61790
United States

Nat Pope

Illinois State University ( email )

Normal, IL 61761
United States

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