Volume 24, Numbers 1 & 2 / March/June , Pages 1-117
Efficiency and Convergence in the European Life Insurance Industry
Multinational Finance Journal, 2020, vol. 24, no. 1/2, pp. 65-91
Dimitrios G Giantsios , University of Macedonia, Greece
Athanasios G. Noulas , University of Macedonia, Greece    Corresponding Author

This article employs a flexible stochastic frontier to estimate revenue efficiency and efficiency convergence for 22 European Union insurance markets during the financial crisis and after. It also looks at firm-specific factors that might affect inefficiency. Revenue efficiency falls with the beginning of the financial crisis but remains relatively stable over the examined period. The average revenue efficiency is found to be 57.4% indicating a 42.6% possible increase in revenue efficiency on average. The results on the issue of convergence are mixed; β-convergence has taken place but not σ-convergence. In fact, σ-divergence occurred during the financial crisis period. Size and diversification seem to negatively affect efficiency.

Keywords : revenue efficiency; β-convergence; σ-convergence; European life insurance industry; stochastic frontier
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