Greenfield foreign direct investments and insurance market diversification: a cross-country analysis

Bojan Srbinoski (), Klime Poposki (), W. Jean Kwon () and Ksenija Dencic-Mihajlov ()
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Bojan Srbinoski: University St. Kliment Ohridski
Klime Poposki: University St. Kliment Ohridski
W. Jean Kwon: St. John’s University
Ksenija Dencic-Mihajlov: University of Niš

The Geneva Papers on Risk and Insurance - Issues and Practice, 2024, vol. 49, issue 3, No 9, 636-661

Abstract: Abstract Foreign direct investments (FDIs) influence insurance markets directly, through foreign insurers’ participation in domestic markets, and indirectly, through cross-sectoral spillover effects. This article focuses on the indirect effects and examines the relationship between greenfield FDIs and diversification in European insurance markets. Using panel data of 28 countries for the period 2004–2019, we find that greenfield FDIs induce greater diversification of insurance markets. Our results suggest a non-linear relationship and potential mediating effects of financial development on the FDI–insurance relationship. Robustness tests using different measures of market diversification, model specifications and averaging of the data show consistent results.

Keywords: Greenfield investment; Foreign direct investment; Insurance markets; Diversification (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41288-023-00301-0

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