Risk, Capital, and Operating Efficiency: Evidence from Taiwan’s Life Insurance Market

Jin-Li Hu () and Hsueh-E Yu

Emerging Markets Finance and Trade, 2015, vol. 51, issue S1, S121-S132

Abstract: In this article, we investigate the relationships among risk, capital, and operating efficiency for Taiwanese life insurance companies from 2004 to 2009 by using the two-stage least-square approach. We find a positive relation between inefficiency and product risk. At the same time, efficient insurers are seen as taking higher asset risk than inefficient insurers. A contrasting finding also shows that the relationship between capital and product risk is positive, while the relationship between capital and asset risk is negative. Moreover, we present a negative relationship between inefficiency and capital level, indicating that well-capitalized insurers operate more efficiently than poorly capitalized insurers.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:51:y:2015:i:s1:p:s121-s132

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DOI: 10.1080/1540496X.2014.998907

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