1. ^aDepartment of Finance, Henry B. Tippie College of Business, University of Iowa, 108 John Pappajohn Business Bldg., W286, Iowa City, Ia 52242-19943, U.S.A. E-mail: ty-leverty@uiowa.edu
2. ^bUniversity of Nebraska-Lincoln, Lincoln, NE 68588-0490, U.S.A. E-mail: ylin@unlnotes.unl.edu
3. ^cAllianz General Representative Office, Room C211, Beijing Lufthansa Center, No. 50 Liangmaqiao Road, Beijing 100125, P.R.China. E-mail: hao.zhou@Allianz.com.cn

Abstract

This paper provides new information on the impact of the entry of foreign firms on a financial services industry by examining the Chinese insurance industry surrounding China's accession to the World Trade Organization (WTO). Our analysis reveals that insurers experienced significant growth in total factor productivity over the sample period. We also observe a structural improvement in efficiency after WTO accession, but geographic and product market restrictions placed on foreign firms reduce these positive effects. Overall, the results are consistent with there being a significant increase in social welfare during our sample period, but they also lend support for further deregulation.