Noriyoshi Yanase

ORGANIZATION STRUCTUREAND CORPORATE DEMANDFOR REINSURANCE : THE CASEOFTHE JAPANESE KEIRETSU: JAPANESE KEIRETSU AND REINSURANCE

This study investigates the impact of organization structure on corporate demand for reinsurance. Previous research has shown that the unique corporate groupings in Japan known as the “keiretsu” have relatively low bankruptcy costs, low agency conflicts, low information asymmetry and low effective taxes. These conditions should mitigate the benefits of reinsurance purchase. This conjecture is tested by examining demand for reinsurance of Japanese non-life insurance companies during 1974-2010. Consistent with the prediction, keiretsu non-life insurers have lower reinsurance purchase than independent non-life insurance companies. The effects of the keiretsu structure also receded when keiretsu groupings’ power was weakened after the asset bubble burst and the breakdown of the convoy system in mid 1990s. Consistent with previous studies, Japanese mutual insurers also purchase more reinsurance than stock insurers.

Effect of Group Affiliation, Ownership Structures, and New Entries on Efficiency: Lessons from the Japanese Life Insurance Industry after Deregulation

Deregulation and the succeeding changes, such as forming group affiliation, demutualization, and new entry from foreign countries, are widespread and worldwide phenomenon in the life insurance industry. This study examines impacts of the deregulation and the succeeding changes on efficiency of the Japanese life insurance industry using a Stochastic Input Distance Frontier Approach, a new version of Stochastic Frontier Analysis (SFA), which is the first application to an insurance industry. The main results are as follows. First, a group affiliated life insurer is more efficient than the others. Second, an efficiency difference between mutual and stock life insurers has been getting larger since deregulation. Third, there is not much difference of efficiency between foreign insurers and domestic insurers. We also find that efficiency of life insurers has decreased on average after deregulation.

Does Corporate Lending by Banks and Life Insurance Companies Differ?: Evidence from Japanese Economy in the Early 1980s

Comparing loans made by main banks to those made by life insurance companies, we test for the existence of specialization in corporate lending. Using a detailed data set with information on individual loans made in Japan in the early 1980s, we empirically examine credit specialization on the part of lenders by investigating the relationship between the concentration of loans from main banks and those from life insurance companies. Empirical evidence suggests that the amounts of loans made by main bank are negatively associated with those by life insurance companies, which is consistent with the lending characteristics of life insurance companies that are known as “Marginal Lenders”.