The Effect of Bank Activity Restriction on Life Insurers’ Efficiency: Evidence from European Markets


  •  Rongrong Zhang    

Abstract

This paper examines the relation between bank entry restrictions into insurance operations and life insurers’ operating efficiency for a sample of 21 European countries over 1995-2003. Controlling for insurance market penetration, insurance risk retention, legal environment, and the economic development of the hosting country, we document that insurers operate more efficiently in markets with lower bank entry restrictions. Our results suggest that financial deregulation has positive spill-over effect, supporting the deregulation efforts in the global financial markets.



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