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Corporate liquidity: evidence from the United Kingdom life insurance industry

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  • Yung-Ming Shiu

Abstract

This study analyses the extent and effects of macroeconomic and firm-specific factors on insurer liquidity in the context of UK life companies with panel data for the period 1985 to 2002. Ordinary least squares regressions, static and dynamic panel data models are estimated. Econometric tests indicate a preference for the random effects estimation procedure over other alternatives. The results indicate that the life office liquidity is an increasing function of equity returns, free asset ratio, termination rate, and claims ratio and a decreasing function of pension reserves-to-total reserves. Also, it is found that mutual companies tend to hold more liquid assets than do stock companies.

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  • Yung-Ming Shiu, 2006. "Corporate liquidity: evidence from the United Kingdom life insurance industry," Applied Economics Letters, Taylor & Francis Journals, vol. 13(15), pages 993-998.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:15:p:993-998
    DOI: 10.1080/13504850500425790
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    References listed on IDEAS

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    1. Ozkan, Aydin & Ozkan, Neslihan, 2004. "Corporate cash holdings: An empirical investigation of UK companies," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2103-2134, September.
    2. Ayub Mehar, 2005. "Impacts of equity financing on liquidity position of a firm," Applied Financial Economics, Taylor & Francis Journals, vol. 15(6), pages 425-438.
    3. A. Panno, 2003. "An empirical investigation on the determinants of capital structure: the UK and Italian experience," Applied Financial Economics, Taylor & Francis Journals, vol. 13(2), pages 97-112.
    4. M. Adams & M. Buckle, 2003. "The determinants of corporate financial performance in the Bermuda insurance market," Applied Financial Economics, Taylor & Francis Journals, vol. 13(2), pages 133-143.
    5. Kim, Chang-Soo & Mauer, David C. & Sherman, Ann E., 1998. "The Determinants of Corporate Liquidity: Theory and Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 33(3), pages 335-359, September.
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    Cited by:

    1. Yakop, Rubayah & Yusop, Zulkornain & radam, alias & Ismail, Noriszura, 2012. "Camel Rating Approach to Assess the Insurance Operators Financial Strength," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 46(2), pages 3-15.
    2. Hung, Jessica & Chang, Vincent Y. L., 2018. "The analysis of capital structure for propertyliability insurers: A quantile regression approach," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(4), pages 829-850, August.

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