ECONOMIC AND DEMOGRAPHIC DETERMINANTS OF THE DEMAND FOR LIFE INSURANCE: MULTIVARIATE ANALYSIS

Yıl 2018, Cilt: 16 Sayı: 1, 102 - 115, 30.09.2018

Elma Satrovıc , Adnan Muslıja

https://doi.org/10.11611/yead.442827

Cited By: 4

Öz

The aim of this paper is to
summarize a large number of economic and demographic determinants that are used
to predict the demand for life insurance into a smaller number of component
variables (components) and to determine which component has a stronger influence
on demand for life insurance. Data are collected for 150 countries during the
period 2005-2010. Final cross-country database is consisted of six-year average
values on variables for selected countries. The methodology includes techniques
of multivariate analysis: principal component analysis (PCA) and multiple
linear regression. Results show that initial determinants of demand for life
insurance can be summarized into two components: economic and demographic. Both
components have a statistically significant positive influence on the demand
for life insurance. On the basis of standardized regression coefficients it can
be concluded that economic component is stronger determinant of demand for life
insurance in comparison with demographic. 

Anahtar Kelimeler

Life insurance demand, Demographic component, Economic component, Multiple linear regression, Principal component analysis

ECONOMIC AND DEMOGRAPHIC DETERMINANTS OF THE DEMAND FOR LIFE INSURANCE: MULTIVARIATE ANALYSIS

Öz

he aim of this paper is to summarize a large number of economic and demographic determinants that are used to predict the demand for life insurance into a smaller number of component variables (components) and to determine which component has a stronger influence on demand for life insurance. Data are collected for 150 countries during the period 2005-2010. Final cross-country database is consisted of six-year average values on variables for selected countries. The methodology includes techniques of multivariate analysis: principal component analysis (PCA) and multiple linear regression. Results show that initial determinants of demand for life insurance can be summarized into two components: economic and demographic. Both components have a statistically significant positive influence on the demand for life insurance. On the basis of standardized regression coefficients it can be concluded that economic component is stronger determinant of demand for life insurance in comparison with demographic.

Anahtar Kelimeler

Life Insurance Demand, Demographic Component, Economic Component, Multiple Linear Regression, Principal Component Analysis

Kaynakça

• Arena, M. (2006) “Does Insurance Market Activity Promote Economic Growth? A Cross-Country Study for Industrialized and Developing Countries”, The World Bank.
• Beck, T. and Webb, I. (2003) “Economic, Demographic, and Institutional Determinants of Life Insurance Consumption across Countries“, The World Bank Economic Review, 17(1): 51-88.
• Çelik, S. and Kayali, M.M. (2009) “Determinants of Demand for Life Insurance in European Countries“, Problems and Perspectives in Management, 7: 32-37.
• Chang, T., Lee, C.C. and Chang, C.H. (2014) “Does Insurance Activity Promote Economic Growth? Further Evidence Based on Bootstrap Panel Granger Causality Test“, The European Journal of Finance, 20: 1187-1210.
• Curak, M., Dzaja, I, and Pepur, S. (2013) “The Effect of Social and Demographic Factors on Life Insurance Demand in Croatia“, International Journal of Business and Social Science, 4(9): 65-72.
• Field, A. (2005) “Discovering Statistics Using SPSS“, SAGE Publications.
• Fortune, P. (1973) “A Theory of Optimal Life Insurance: Development and Test“, The Journal of Finance, 28(3): 587-600.
• Hair, J.F., Black, W.C., Babin, B.J and Anderson, R.E. (2009) “Multivariate Data Analysis“, Pearson.
• Haiss, P. and Sumegi, K. (2008) “The Relationship of Insurance and Economic Growth-A Theoretical and Empirical Analysis. Empirica“, Journal of Applied Economics and Economic Policy, 35(4): 405-431.
• Hakansson, N. H. (1969) “Optimal Investment and Consumption Strategies under Risk, an Uncertain Lifetime, and Insurance“, International Economic Review, 10(3): 443-466.
• Lee, F. (2015) “An Empirical Analysis on Quantity Demand of Life İnsurance in China“, Proceedings of 2014 1st International Conference on Industrial Economics and Industrial Security 2015, 241-247.
• Lee, S.J., Kwon, S. and Chung, S.Y. (2010) “Determinants of Household Demand for Insurance: The Case of Korea“, The Geneva Papers, 35: S82–S91. Lewis, E. D. (1989) “Dependents and the Demand for Life Insurance“, American Economic Review, 79(3): 452-467.
• Kline, P. (1999) “The Handbook of Psychological Testing“, Routledge.
• McFadden, D. (1974) “Conditional Logit Analysis of Qualitative Choice Behavior“, Academic Press: New York.
• Medeiros Garcia, M.T. (2012) “Determinants of the Property-Liability Insurance Market: Evidence from Portugal“, Journal of Economic Studies, 39: 440-450.
• Munir, S., Khan, A. and Jamal, A. (2012) “Impacts of Macroeconomic & Demographic Variables on the Demand of Life Insurance: A case study of State Life Insurance Corporation of Pakistan (1973-2010)“, University of Management and Technology, Lahore, Pakistan.
• Nesterova, D. (2008) “Determinants of the Demand for Life Insurance: Evidence from Selected CIS and CEE Countries“, National University “Kyiv-Mohyla Academy”.
• Outreville, J. F. (1996) “Life Insurance Markets in Developing Countries“, Journal of Risk and Insurance, 63(2): 263-278.
• Outreville, J.F. (2015) “The Relationship between Relative Risk Aversion and the Level of Education: a Survey and Implications of the Demand for Life Insurance“, Journal of Economic Surveys, 29: 97-111.
• Sakar, E., Keskin, S. and Unver, H. (2011) “Using of Factor Analysis Scores in Multiple Linear Regression Model for Prediction of Kernel Weight in Ankara Walnuts“, The Journal of Animal & Plant Sciences, 21(2): 182-185.
• Sen, S. (2008) “Insurance in India: Determinants of growth and the Case of Climate Change“, TERI University.
• Singhal, R. and Anilk, M. (2000) “Environmental Issues and Management of Waste in Energy and Mineral Production“, Balkema.
• Sliwinski, A., Michalski, T. and Roszkiewicz, M. (2013) “Demand for Life Insurance—An Empirical Analysis in the Case Of Poland“, The Geneva Papers, 38: 62-87.
• Tien, J.J. and Yang, S.S. (2014) “The Determinants of Life Insurer’s Growth for a Developing Insurance Market: Domestic vs. Foreign Insurance Firms“, The Geneva Papers, 39: 1-24.
• Ward, D. and Zurbruegg, R. (2002) “Law, Politics and Life Insurance Consumption in Asia“, Geneva Papers on Risk and Insurance, 27(3): 395-412.
• Yaari, M. E. (1965) “Uncertain Lifetime, Life Insurance and the Theory of the Consumer“, Review of Economic Studies, 32(2): 137-150.
• Yang, S.Y., Li, H.A. and Fang, H.C. (2015) “The Non-Linear Relationship Between Economic and Life Insurance Development in Asia: A Panel Threshold Regression Analysis“, Springer, 330: 1281-1290.