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

Li‐Ying Huang, Yu‐Luen Ma and Nat Pope

Risk Management and Insurance Review, 2012, vol. 15, issue 1, 57-88

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.

Date: 2012
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https://doi.org/10.1111/j.1540-6296.2011.01202.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:rmgtin:v:15:y:2012:i:1:p:57-88

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