Study on the Influence of Regulatory Penalty on the Business Performance of Life Insurance Companies

Bin Hu; Yingjie Ma

doi:10.6981/FEM.202412_5(12).0006

Authors

Bin Hu
Yingjie Ma

DOI:

https://doi.org/10.6981/FEM.202412_5(12).0006

Keywords:

Regulatory Penalties; Life Insurance Company; Business Performance.

Abstract

As an important part of micro-prudential supervision, regulatory punishment is of great significance for preventing and resolving major risks in the life insurance industry and guiding the steady operation of life insurance companies. In the policy environment of increasing supervision, the impact of regulatory punishment on the business performance of life insurance companies has gradually become a hot topic of academic research. Based on the micro data of 48 life insurance companies in China’s life insurance industry from 2010 to 2021, this paper empirically examines the impact of regulatory penalties on the business performance of life insurance companies. The study shows that the short-term regulatory penalty suppresses the business performance of life insurance companies, and it still takes time to exert the positive effect of microprudential supervision. This conclusion is established after stability testing and endogenous treatment. The mechanism analysis shows that the regulatory penalty has a negative impact on the overall business performance of life insurance companies by improving the heterogeneity analysis shows that the regulatory penalty has a more significant negative impact on the business performance of Chinese-funded holding, non-bank and compensation generation. The research in this paper enriches the empirical evidence on the effectiveness of regulatory penalties, and provides theoretical support for the establishment of a long-term mechanism to prevent and defuse risks in the insurance industry.

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