Economic, Demographic, and Institutional Determinants of Life Insurance Consumption across countries

By Thorsten Beck, Ian Webb. 2003

621 citations recorded by the source corpus.

Life insurance has become an increasingly important part of the financial sector over the past 40 years, providing a range of financial services for consumers and becoming a major source of investment in the capital market. But what drives the large variation in life insurance consumption across countries remains unclear. Using a panel with data aggregated at different frequencies for 68 economies in 1961-2000, this article finds that economic indicators such as inflation, income per capita, and banking sector development and religious and institutional indicators are the most robust predictors of the use of life insurance. Education, life expectancy, the young dependency ratio, and the size of the social security system appear to have no robust association with life insurance consumption. The results highlight the importance of price stability and banking sector development in fully realizing the savings and investment functions of life insurance in an economy.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/6f630d10e512e7d9e3bf5869448cbc018cf925b2

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In Accounting

1. E. Feyen
2. Roberto Rocha
3. R. Lester
4. Yi-Bin Chiu
5. Chien‐Chiang Lee

In Economics and Econometrics

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In Finance

1. Chien‐Chiang Lee
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7. Yi-Bin Chiu
8. Chi‐Chuan Lee

Citations in the corpus

• What Drives the Development of the Insurance Sector? An Empirical Analysis Based on a Panel of Developed and Developing Countries (2011, positive): “Beck and Webb (2003) argue that higher real interest rates would increase the investment return of providers which would be able to offer more attractive returns to consumers.”
• The demand for life insurance in OECD countries (2007, critical): “The negative influence of real interest rates stands in contrast to Beck and Webb (2003). The result suggests that households are not attracted by lower prices to increase their purchase of life insur ance, but appear to take advantage of higher real rates to reduce their investment in life insuranc”
• The link between life insurance activities and economic growth: Some new evidence (2013, background): “Thus, any previous studies that focused on unidirectional analysis – namely, either on life insurance demand (Beck and Webb, 2003) or economic growth – ignored another direction in the insurance-growth nexus.”
• The relationship between insurance and economic growth in Europe: a theoretical and empirical analysis (2008, background): “Muslim countries, for example, have the lowest insurance penetration rate due to their religion’s emphasis on collectivism (Beck and Webb 2003; Webb et al. 2002).”
• Competition, Efficiency, and Soundness in European Life Insurance Markets (2017, neutral): “We follow previous international insurance studies inselecting country environmental factors that may affect competition in the life insurance market(e.g. Arena, 2008; Beck and Webb, 2003; Pope and Ma, 2008; and Cummins et al., 2013).”