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Does one size fit all? Determinants of insurer capital structure around the globe

Listed author(s):
  • Altuntas, Muhammed
  • Berry-Stölzle, Thomas R.
  • Wende, Sabine
Registered author(s):

    As financial markets become more global, the question arises whether any country specific considerations are still relevant for insurance companies’ capital structure. This research examines this question with firm-level data across a broad range of countries including those in developing markets. What we find is that the optimal capital structure of insurance companies is not homogeneous across countries. We find that country-level factors explain a substantial fraction of the cross-sectional variation in insurance companies’ capitalization levels. Our results add to the current policy discussion on global regulatory capital requirements. If insurer capital structure is not homogeneous across countries, a global capital standard – if desired – should take differences in the institutional environments across countries into account to avoid market distortions.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0378426615002708
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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 61 (2015)
    Issue (Month): C ()
    Pages: 251-271

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    Handle: RePEc:eee:jbfina:v:61:y:2015:i:c:p:251-271
    DOI: 10.1016/j.jbankfin.2015.09.012
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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