Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100664
Authors: 
Dong, Ming
Year of Publication: 
2014
Series/Report no.: 
ICIR Working Paper Series 17/14
Abstract: 
This article explores life insurance consumption in 31 European countries from 2003 to 2012 and aims to investigate the extent to which market transparency can affect life insurance demand. The cross-country evidence for the entire sample period shows that greater market transparency, which resolves asymmetric information, can generate a higher demand for life insurance. However, when considering the financial crisis period (2008-2012) separately, the results suggest a negative impact of enhanced market transparency on life insurance consumption. The mixed findings imply a trade-off between the reduction in adverse selection under greater market transparency and the possible negative effects on life insurance consumption during the crisis period due to more effective market discipline. Furthermore, this article studies the extent to which transparency can influence the reaction of life insurance demand to bad market outcomes: i.e., low solvency ratios or low profitability. The results indicate that the markets with bad outcomes generate higher life insurance demand under greater transparency compared to the markets that also experience bad outcomes but are less transparent.
Subjects: 
life insurance demand
transparency
market discipline
JEL: 
G14
G22
Document Type: 
Working Paper

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