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Regulations and soundness of insurance firms: International evidence

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  • Pasiouras, Fotios
  • Gaganis, Chrysovalantis

Abstract

This paper provides the first cross-country study on the association between firms' soundness and regulatory policies in the insurance industry. Measuring solvency with an accounting based measure of distance to default, namely the Z-score, we find that the power of the supervisory authorities, and regulations related to both technical provisions and investments have an impact on soundness that is robust to controls for firm-specific and country-specific factors. In contrast, corporate governance and internal control rules do not influence soundness. Similarly, capital requirements do not appear to have a robust impact on soundness.

Suggested Citation

  • Pasiouras, Fotios & Gaganis, Chrysovalantis, 2013. "Regulations and soundness of insurance firms: International evidence," Journal of Business Research, Elsevier, vol. 66(5), pages 632-642.
    • Handle: RePEc:eee:jbrese:v:66:y:2013:i:5:p:632-642
    DOI: 10.1016/j.jbusres.2012.09.023
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