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DEA-based Comparative Analysis on the Efficiency of Asset Management of Life Insurance Companies in Korea and China

  • Journal of Asia-Pacific Studies
  • Abbr : JAPS
  • 2019, 26(2), pp.229-257
  • DOI : 10.18107/japs.2019.26.2.007
  • Publisher : Institute of Global Affairs
  • Research Area : Social Science > Social Science in general
  • Received : May 12, 2019
  • Accepted : June 3, 2019
  • Published : June 30, 2019

JIN XU 1,  Lee Ki-Seong 1

1건국대학교

Accredited

ABSTRACT

At present, the world’s capital market is in a depressed state, which caused many crisis problems in the insurance industry. On one hand, insurance companies perform the functions of insurance company, but on the other hand, they will carry out the functions of the financial asset management companies to have huge financial assets. The insurance companies have become important institutional investors in the capital markets because of large-scale operating insurance funds. The characteristics of insurance fund, such as huge, stable and long term have provided the safeguard for the sources of funding, such as infrastructure construction, national debt launch and enterprise financing, which is helpful to promote the long-term stable development of the social and economic life. In the process, life insurance companies are also able to make a profit. The investment business contributes more and more to the profit. South Korea and China are as the two fastest-growing countries in the Asian insurance market. The rapidly development of insurance market provides sufficient insurance assets for insurance companies in both countries. The effective use of this part of funds will play a vital role in promoting the development of the insurance industry of the two countries. Under this background, the thesis will compare the efficiency of insurance funds between the two countries and analyze whether the insurance funds of the two countries are effectively utilized. Therefore, the thesis adopts DEA method and Malmquist productivity index to determine the relative efficiency and variation of the capital application of life insurance enterprises in Korea and China. This study take the data of 28 of the life insurance companies of China and 22 insurance companies of South Korea from 2010 to 2015 years as sample, and use DEA method to measure the technological efficiency, pure technological efficiency and scale efficiency of these enterprises. Then the productivity index is used to measure the change of these efficiencies and the change of productivity. Therefore, the thesis adopts DEA method and Malmquist productivity index to determine the relative efficiency and variation of the capital application of life insurance enterprises in Korea and China. This study take the data of 28 of the life insurance companies of China and 22 insurance companies of South Korea from 2010 to 2015 years as sample, and use DEA method to measure the technological efficiency, pure technological efficiency and scale efficiency of these enterprises. Then the productivity index is used to measure the change of these efficiencies and the change of productivity. The conclusion is that from 2010 to 2015, the average annual technological efficiency, pure technological efficiency and scale efficiency of Korean life insurance enterprises’ funds are higher than China. The analysis result of the productivity index shows that South Korea and China’s annual average productivity is higher than 1, indicating an upward trend. Most of the South Korean enterprises and the majority of Chinese enterprises are in a state of relatively high competitiveness and high growth rate. The development level of China is constantly close to the development level of South Korea.

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