MEASURING COST EFFICIENCY IN THE TAIWAN LIFE INSURANCE INDUSTRY

• Main Authors: Shu-yi Su, 蘇姝宜
• Other Authors: Meng-lung Shih
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/91166116260147847758

碩士 === 南華大學 === 財務金融學系財務管理碩士班 === 97 === 　　Accompanied with the opening of the Taiwan life insurance market and the enactment of the Financial Holding Company Act, the life insurance industry has become more competitive than ever. Those companies that didn’t run well will be out soon. In such circumstances, how to maximize profits is the key to success. Therefore, how to make the most of resources and at the same time to prevent the waste of resources is the main issue. The purpose of the study is to analyze and examine the economics of scale and cost efficiency of the life insurance companies. The analysis is based on the stochastic frontier function. The research sample contains 33 life insurance companies in Taiwan and sample period start from 1997 to 2007. The conclusion can be summarized as follows: 　　1. The life insurance companies in Taiwan exhibits the economics of scale. Cost efficiency of the life insurance companies in Taiwan is between 0.55∼0.8, showing that most the life insurance companies are not in their the best situation. Using Tobit Regression Model Analysis, this study finds that fixed asset turnover ratio, liquidity ratio and cost-effectiveness is positively correlated. 　　2. No matter what scale size and types of company their economics of scale are deceasing with time, however, among them, mid-size and small-size firms exhibit a better economics of scale than big-size one. Foreign subsidiary firms are the best in economics of scale while financial holding companies are the worse. To the contrary, the cost efficiency value are increasing with time for all firms, and among them, mid-size firms have the largest improvements compared to the small size one. Financial holding companies have the best improvement in cost efficiency while the foreign subsidiaries have the worse. 　　3. Those firms transforming into a financial holding company are not showing batter value in the economics of scale than before in addition. Those firms who don’t become a financial holding ones exhibit better economics of scale than those who do to as far as the cost efficiency.