Does one size fit all? Determinants of insurer capital structure around the globe

Muhammed Altuntas, Thomas R. Berry-Stölzle and Sabine Wende

Journal of Banking & Finance, 2015, vol. 61, issue C, 251-271

Abstract: As financial markets become more global, the question arises whether any country specific considerations are still relevant for insurance companies’ capital structure. This research examines this question with firm-level data across a broad range of countries including those in developing markets. What we find is that the optimal capital structure of insurance companies is not homogeneous across countries. We find that country-level factors explain a substantial fraction of the cross-sectional variation in insurance companies’ capitalization levels. Our results add to the current policy discussion on global regulatory capital requirements. If insurer capital structure is not homogeneous across countries, a global capital standard – if desired – should take differences in the institutional environments across countries into account to avoid market distortions.

Keywords: Capital structure; International finance; Regulation; Financial institutions; Insurance markets (search for similar items in EconPapers)
JEL-codes: F33 G15 G22 G28 L51 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:61:y:2015:i:c:p:251-271

DOI: 10.1016/j.jbankfin.2015.09.012

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