Financial policy and insurance development: Do financial reforms matter and how?

This paper investigates the relationship between financial policies and life insurance development and how country-specific characteristics such as economic development level, financial structure, and governance environments influence the effect of financial reforms. We examine the association between life insurance development and the overall index as well as several sub-dimensions of financial reform, including interest rate liberalization, entry barriers, privatization, capital account restrictions, and securities market policy. We find that financial reforms alone are not significantly correlated with the development of the life insurance market. However, interest rate liberalization matters after accounting for the influence of country-specific characteristics.