Effect of Group Affiliation, Ownership Structures, and New Entries on Efficiency: Lessons from the Japanese Life Insurance Industry after Deregulation

39 Pages Posted: 23 Feb 2010

See all articles by Noriyoshi Yanase

Noriyoshi Yanase

Keio University - Faculty of Business and Commerce

Kozo Harimaya

Sapporo Gakuin University

Yoshihiro Asai

Meiji University

Date Written: February 22, 2010

Abstract

Deregulation and the succeeding changes, such as forming group affiliation, demutualization, and new entry from foreign countries, are widespread and worldwide phenomenon in the life insurance industry. This study examines impacts of the deregulation and the succeeding changes on efficiency of the Japanese life insurance industry using a Stochastic Input Distance Frontier Approach, a new version of Stochastic Frontier Analysis (SFA), which is the first application to an insurance industry. The main results are as follows. First, a group affiliated life insurer is more efficient than the others. Second, an efficiency difference between mutual and stock life insurers has been getting larger since deregulation. Third, there is not much difference of efficiency between foreign insurers and domestic insurers. We also find that efficiency of life insurers has decreased on average after deregulation.

Keywords: Efficiency Analysis, Stochastic Frontier Analysis, Deregulation, Group affiliation

JEL Classification: G22, G32, L22

Suggested Citation

Yanase, Noriyoshi and Harimaya, Kozo and Asai, Yoshihiro, Effect of Group Affiliation, Ownership Structures, and New Entries on Efficiency: Lessons from the Japanese Life Insurance Industry after Deregulation (February 22, 2010). Available at SSRN: https://ssrn.com/abstract=1557342 or http://dx.doi.org/10.2139/ssrn.1557342

Noriyoshi Yanase (Contact Author)

Keio University - Faculty of Business and Commerce ( email )

2-15-45 Mita
Minato-ku
Tokyo 108-8345
Japan
1088345 (Fax)

Kozo Harimaya

Sapporo Gakuin University ( email )

Sapporo 062-8520
United States

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