Financial Supervision, Financial Crisis and Life Insurance Companies: International Evidence in OECD Countries

18 Pages Posted: 21 Nov 2015

See all articles by Bum Kim

Bum Kim

Soongsil University

W. Jean Kwon

School of Risk Management, St. John's University

Date Written: November 20, 2015

Abstract

This paper is to examine life insurance companies in the OECD countries to identify the major firm-specific determinants of the profitability and test the impact of regulatory system in those countries. We consider two important agency structures of insurance industry supervision and regulations, prudential supervision and business conduct regulation. The agency structure of prudential supervision is significant in OECD countries, but not in Germany and the US. We found that FSA-type excluding Germany and the US may help insurers increase their profitability compared to the companies with Sectoral-type agency structure. Meanwhile, the agency structure of business conduct is also significant in OECD countries on average. It is because the issue of business conduct becomes a socially important issue in Germany and the US so that having FSA may lessen the insurer profitability, especially in Germany.

Keywords: Prudential Supervision, Business Conduct Regulation, Profitability, LIfe Insurance Company, Financial Crisis

JEL Classification: G22,G38

Suggested Citation

Kim, Bum and Kwon, W. Jean, Financial Supervision, Financial Crisis and Life Insurance Companies: International Evidence in OECD Countries (November 20, 2015). Available at SSRN: https://ssrn.com/abstract=2693410 or http://dx.doi.org/10.2139/ssrn.2693410

Bum Kim (Contact Author)

Soongsil University ( email )

School of Finance
509 Venture Bldg
Seoul, Seoul
Korea, Republic of (South Korea)
82-2-820-0563 (Phone)

W. Jean Kwon

School of Risk Management, St. John's University ( email )

101 Astor Place
New York, NY 10003
United States
212-277-5196 (Phone)

HOME PAGE: http://Facpub.stjohns.edu/~KwonW/

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