The Link between Insurance and Banking Sectors: An International Cross-Section Analysis of Life Insurance Demand
AbstractLife insurance has become an increasingly important part of the financial sector. The past ten years have witnessed significant changes of the market conditions faced by the insurance industry. Two trends are especially crucial: the assimilation of banking-sector type activities by life insurers and the consolidation of financial services (e.g. bancassurance). This article identifies the factors determining consumption for life insurance products across 90 countries for the year 2005. We introduce new factors to account for the increased link between bank and insurance sectors. Using a larger dataset, our results confirm the existing literature by showing that countries with higher income, better developed financial system, better educated population and higher old ratio spend more money on life insurance products whereas life expectancy tends to decrease life insurance demand. Moreover, institutional, religious and legal factors are found to be important. The levels of inflation and interest rates, the young ratio and the size of the social security system appear to have no robust association with life insurance consumption. The set of new variables introduced: bancassurance and banking efficiency appear significant, with a negative impact on life insurance consumption. Restricting our sample to developed countries confirm previous results for banking efficiency and bancassurance. The results highlight that the increasing blurring of the boundaries between insurers and banks impact life insurance demand.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 10-040.
Length: 37 p.
Date of creation: Aug 2010
Date of revision:
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More information through EDIRC
Life Insurance; Insurance Demand; Bancassurance; Cross-section Analysis;
Find related papers by JEL classification:
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
- NEP-BAN-2010-09-11 (Banking)
- NEP-IAS-2010-09-11 (Insurance Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lewis, Frank D, 1989. "Dependents and the Demand for Life Insurance," American Economic Review, American Economic Association, vol. 79(3), pages 452-67, June.
- Beenstock, Michael & Dickinson, Gerry & Khajuria, Sajay, 1986. "The determination of life premiums: An international cross-section analysis 1970-1981," Insurance: Mathematics and Economics, Elsevier, vol. 5(4), pages 261-270, October.
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