Digital transformation and total factor productivity in insurance companies: a catalyst or inhibitor?

Ruiyun Wanyan, Tongpu Zhao (), Lingyan Suo and Gene C. Lai
Additional contact information
Ruiyun Wanyan: Southwestern University of Finance and Economics
Tongpu Zhao: Peking University
Lingyan Suo: Peking University
Gene C. Lai: University of North Carolina at Charlotte

The Geneva Papers on Risk and Insurance - Issues and Practice, 2025, vol. 50, issue 1, No 6, 142-184

Abstract: Abstract Using data on 76 Chinese insurance companies from 2011 to 2020, this study investigates the impact of digital transformation (DT) on total factor productivity (TFP). We use the latent Dirichlet allocation (LDA) method to quantify the DT index within sample firms. Our analysis reveals a U-shaped relationship between the DT index and TFP, suggesting that insurance companies experience an initial decline in TFP at low levels of DT, followed by an eventual increase as the benefits of DT are realized. We also find the DT of most insurance companies is at the initial stage and they suffer poor efficiency. Our findings appear to be robust with respect to alternative reference documents, instrumental variable analysis, number of topics, and various subsamples. Furthermore, we identify and find three channels (management expenses, financial costs, and intangible assets) are statistically significant.

Keywords: Digital transformation; Insurance companies; Total factor productivity; U-shaped relationship (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41288-024-00340-1 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:gpprii:v:50:y:2025:i:1:d:10.1057_s41288-024-00340-1

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/41288/PS2

DOI: 10.1057/s41288-024-00340-1

Access Statistics for this article

The Geneva Papers on Risk and Insurance - Issues and Practice is currently edited by Christophe Courbage

More articles in The Geneva Papers on Risk and Insurance - Issues and Practice from Palgrave Macmillan, The Geneva Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().