1. ^aDepartment of Finance, Jinan University, Guangzhou 510632, China
2. ^bSchool of Banking and Finance, University of New South Wales, Sydney, NSW 2052, Australia
3. ^cResearch Institute of Finance, Jinan University, Guangzhou 510632, China
4. ^dEquity Capital Markets, Citigroup Global Markets Asia Ltd, Hong Kong SAR

Correspondence: Donghui Li, E-mail: Donghui@unsw.edu.au

Abstract

This paper examines the determinants of foreign participation in life insurance markets across 24 OECD countries during the period 1993–2000. The empirical results show that socio-economic and market structure factors influence foreign participation in life insurance markets. More specifically, life expectancy, foreign market share, income, dependency ratio, financial development, level of competition, economic growth and market liberalisation have positive impacts, whereas expense/combined ratios and social security expenditure have negative impacts on foreign participation in life insurance markets. In addition, governance/legal indicators (common law, political stability, government effectiveness, regulatory quality, the rule of law and control of corruption) all show positive impacts on foreign participation in life insurance markets.