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@article{ART002112262},
author={남윤미 and Hae Won Byun},
title={The Effect of Product Diversification on Profitability of Korean Insurers},
journal={Journal of Insurance and Finance},
issn={2384-3209},
year={2016},
volume={27},
number={2},
pages={111-143},
doi={10.23842/jif.2016.27.2.004}

TY - JOUR
AU - 남윤미
AU - Hae Won Byun
TI - The Effect of Product Diversification on Profitability of Korean Insurers
JO - Journal of Insurance and Finance
PY - 2016
VL - 27
IS - 2
PB - Korea Insurance Research Institute
SP - 111
EP - 143
SN - 2384-3209
AB - While business diversification can have a positive effect on the performance of a firm through economies of scopes and distributing uncertainty or risk over the different business lines, it can also have a negative impact on the efficiency and on the profitability of a firm through possible costs from business expansion, or inefficient subsidies to unproductive sectors inside the firm. Therefore, it would be an empirical question whether business diversification is beneficial or harmful to a firm. This paper analyzes how insurers' product diversification strategies affect their profitability and its volatility, using data on Korean life insurance companies from FY2003 to FY2012. Our estimation results suggest that product diversification of an insurer has a negative effect on its profitability, evaluated through ROA. However, after considering the volatility of its profitability, product diversification and profitability measured by RAROA have a nonlinear relationship, where either low or high level of diversification results in higher profitability than moderate level.
KW - Product diversification;Profitability;ROA;RAROA
DO - 10.23842/jif.2016.27.2.004
ER -

남윤미 and Hae Won Byun. (2016). The Effect of Product Diversification on Profitability of Korean Insurers. Journal of Insurance and Finance, 27(2), 111-143.

남윤미 and Hae Won Byun. 2016, "The Effect of Product Diversification on Profitability of Korean Insurers", Journal of Insurance and Finance, vol.27, no.2 pp.111-143. Available from: doi:10.23842/jif.2016.27.2.004

남윤미, Hae Won Byun "The Effect of Product Diversification on Profitability of Korean Insurers" Journal of Insurance and Finance 27.2 pp.111-143 (2016) : 111.

남윤미, Hae Won Byun. The Effect of Product Diversification on Profitability of Korean Insurers. 2016; 27(2), 111-143. Available from: doi:10.23842/jif.2016.27.2.004

남윤미 and Hae Won Byun. "The Effect of Product Diversification on Profitability of Korean Insurers" Journal of Insurance and Finance 27, no.2 (2016) : 111-143.doi: 10.23842/jif.2016.27.2.004

남윤미; Hae Won Byun. The Effect of Product Diversification on Profitability of Korean Insurers. Journal of Insurance and Finance, 27(2), 111-143. doi: 10.23842/jif.2016.27.2.004

남윤미; Hae Won Byun. The Effect of Product Diversification on Profitability of Korean Insurers. Journal of Insurance and Finance. 2016; 27(2) 111-143. doi: 10.23842/jif.2016.27.2.004

남윤미, Hae Won Byun. The Effect of Product Diversification on Profitability of Korean Insurers. 2016; 27(2), 111-143. Available from: doi:10.23842/jif.2016.27.2.004

남윤미 and Hae Won Byun. "The Effect of Product Diversification on Profitability of Korean Insurers" Journal of Insurance and Finance 27, no.2 (2016) : 111-143.doi: 10.23842/jif.2016.27.2.004