Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The Determinants of the Use of Derivatives in the Japanese Insurance Companies

The Determinants of the Use of Derivatives in the Japanese Insurance Companies doi 10.1515/apjri-2012-0008 APJRI 2014; 8(1): 57–81 I Wayan Nuka Lantara* and Atsushi Takao The Determinants of the Use of Derivatives in the Japanese Insurance Companies Abstract: This paper examines the firm-specific factors determining the use of derivatives by the sample of Japanese life and non-life Japanese insurance companies during the period of 2001–2011. We find that the participation rate for the use of derivatives by insurance companies in Japan is 73.2%, much higher than those found in the US, the UK, or Australia. Using the Probit and Tobit regression models, we provide evidence that the decision to use deriva- tives of Japanese insurance companies is positively related to firm size, leverage, organizational form, and proportion of assets invested in stocks and bonds, but negatively associated with reinsurance dependence. We also find that the deci- sion of Japanese insurance companies to extend their markets by operating globally increases the need for derivatives contracts. Keywords: risk management, derivatives, insurance *Corresponding author: I Wayan Nuka Lantara, Faculty of Economics and Business, Universitas Gadjah Mada, Jl. Sosio Humaniora No. 01 Bulaksumur, Yogyakarta, Indonesia 55281, E-mail: waynuk@gmail.com Atsushi Takao, Graduate School of Business Administration, Kobe University, 2-1 Rokkodai, Nada, Kobe, Japan 657-8501, E-mail: takao@kobe-u.ac.jp http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia-Pacific Journal of Risk and Insurance de Gruyter

The Determinants of the Use of Derivatives in the Japanese Insurance Companies

Download PDF
26 pages

Loading next page...
 
/lp/de-gruyter/the-determinants-of-the-use-of-derivatives-in-the-japanese-insurance-khGKBLA8sb
Publisher
de Gruyter
Copyright
Copyright © 2011–2019 by Walter de Gruyter GmbH
ISSN
2153-3792
DOI
10.1515/apjri-2012-0008
Publisher site
See Article on Publisher Site

Abstract

doi 10.1515/apjri-2012-0008 APJRI 2014; 8(1): 57–81 I Wayan Nuka Lantara* and Atsushi Takao The Determinants of the Use of Derivatives in the Japanese Insurance Companies Abstract: This paper examines the firm-specific factors determining the use of derivatives by the sample of Japanese life and non-life Japanese insurance companies during the period of 2001–2011. We find that the participation rate for the use of derivatives by insurance companies in Japan is 73.2%, much higher than those found in the US, the UK, or Australia. Using the Probit and Tobit regression models, we provide evidence that the decision to use deriva- tives of Japanese insurance companies is positively related to firm size, leverage, organizational form, and proportion of assets invested in stocks and bonds, but negatively associated with reinsurance dependence. We also find that the deci- sion of Japanese insurance companies to extend their markets by operating globally increases the need for derivatives contracts. Keywords: risk management, derivatives, insurance *Corresponding author: I Wayan Nuka Lantara, Faculty of Economics and Business, Universitas Gadjah Mada, Jl. Sosio Humaniora No. 01 Bulaksumur, Yogyakarta, Indonesia 55281, E-mail: waynuk@gmail.com Atsushi Takao, Graduate School of Business Administration, Kobe University, 2-1 Rokkodai, Nada, Kobe, Japan 657-8501, E-mail: takao@kobe-u.ac.jp

Journal

Asia-Pacific Journal of Risk and Insurance – de Gruyter

Published: Jul 9, 2013

Keywords: risk management

References

  • Survey into the Use of Derivatives by Large Non - Financial Firms Operating in
    De Ceuster
  • On The Determinants of Derivative Usage by Australian Companies of
    Nguyen
  • Costly Risk Bearing and the Supply of Catastrophic Insurance of Risk and
    Kleffner
  • Survey of Derivatives Usage by US Non - Financial Firms
    Bodnar
  • Corporate Hedging in the Insurance Industry : The Use of Financial Derivatives by US Insurers Actuarial
    Cummins
  • Determinants of Derivatives Usage in the Life and General Insurance Industry : The Australian Evidence of Pacific Basin Financial Markets and Policies
    De Ceuster
  • Large Companies Derivatives
    Grant
  • Reinsurance and the Liability Insurance Crisis of and
    Berger
  • Does Regulation Benefit Incumbent Firms ? An Investigation of Japanese Insurance Market Deregulation of Insurance Regulation
    Yamori
  • Derivatives and Corporate Risk Management : Participation and Volume Decisions in the Insurance Industry of Risk and
    Cummins
  • Risks in Derivative Markets : Implication for the Insurance Industry The of Risk and
    Hentschel
  • Derivatives and Corporate Risk Management : Participation and Volume Decisions in the Insurance Industry of Risk and
    Cummins
  • Reinsurance and the Liability Insurance Crisis of and
    Berger
  • The Motives for Corporate Hedging Among UK Multinationals of
    Joseph
  • Empirical Evidence on the Corporate Use of Derivatives
    Berkman
  • Large Companies Derivatives
    Grant
  • Empirical Evidence on the Corporate Use of Derivatives
    Berkman
  • Contractual Provisions Organizational Structure Control in Insurance Markets of
    Mayers
  • On The Determinants of Derivative Usage by Australian Companies of
    Nguyen
  • Determinants of Corporate Hedging Behavior : Evidence from the Life Insurance Industry of Risk and
    Colquitt
  • Japan Insurance Core Principles Detailed Assessment of Observance IMF Country Report Accessed http www imf org external pubs ft scr cr pdf
    May
  • On the Determinants of Corporate Hedging of
    Nance
  • The Determinants of Financial Derivatives Use in the United Kingdom Life Insurance Industry
    Hardwick
  • Determinants of Derivatives Usage in the Life and General Insurance Industry : The Australian Evidence of Pacific Basin Financial Markets and Policies
    De Ceuster
  • Theory of the Firm : Managerial Behavior Agency Costs and Ownership Structure of
    Jensen
  • Risk Coordinating Corporate Investment and Financing Policies The of
    Froot
  • Survey of Derivatives Usage by US Non - Financial Firms
    Bodnar
  • Japan Insurance Core Principles Detailed Assessment of Observance IMF Country Report Accessed http www imf org external pubs ft scr cr pdf
    May
  • Japan s Life Insurance Industry Gains Strength by Overcoming Financial Crisis of Capital Markets
    Inoue
  • The Motives for Corporate Hedging Among UK Multinationals of
    Joseph
  • Survey of Derivatives Usage by US Non - Financial Firms National Bureau of Economic Research Working Paper
    Bodnar
  • Does Regulation Benefit Incumbent Firms ? An Investigation of Japanese Insurance Market Deregulation of Insurance Regulation
    Yamori
  • Ow Derivatives Usage in UK Non - Financial Listed Companies of
    Mallin
  • Survey of Derivatives Usage by US Non - Financial Firms
    Bodnar
  • The Life Insurance as an Options Package of Risk and
    Smith
  • Costly Risk Bearing and the Supply of Catastrophic Insurance of Risk and
    Kleffner
  • Corporate Hedging in the Insurance Industry : The Use of Financial Derivatives by US Insurers Actuarial
    Cummins
  • Risks in Derivative Markets : Implication for the Insurance Industry The of Risk and
    Hentschel
  • Overview of Asian Insurance Markets Proceeding on and Colloquium in Accessed http www actuaries org HongKong Presentations pdf
    Walpole
  • The Determinants of Financial Derivatives Use in the United Kingdom Life Insurance Industry
    Hardwick
  • An Empirical Investigation on Derivatives Usage : Evidence from the United Kingdom General Insurance Industry
    Shiu
  • The Life Insurance as an Options Package of Risk and
    Smith
  • Determinants of Corporate Hedging Behavior : Evidence from the Life Insurance Industry of Risk and
    Colquitt
  • Derivatives and Their Application to Insurance A Retrospective and Prospective Overview InThe Changing Risk Landscape Implications for Insurance Risk Management edited by Proceeding of a conference sponsored by Aon Group Australia Ltd Sydney Australia
    Hodgson
  • On the Determinants of Corporate Hedging of
    Nance
  • Survey of Derivatives Usage by US Non - Financial Firms National Bureau of Economic Research Working Paper
    Bodnar
  • Theory of the Firm : Managerial Behavior Agency Costs and Ownership Structure of
    Jensen
  • Derivatives and Their Application to Insurance A Retrospective and Prospective Overview InThe Changing Risk Landscape Implications for Insurance Risk Management edited by Proceeding of a conference sponsored by Aon Group Australia Ltd Sydney Australia
    Hodgson
  • An Empirical Investigation on Derivatives Usage : Evidence from the United Kingdom General Insurance Industry
    Shiu
  • Overview of Asian Insurance Markets Proceeding on and Colloquium in Accessed http www actuaries org HongKong Presentations pdf
    Walpole
  • Survey of Derivatives Usage by US Non - Financial Firms
    Bodnar
  • Contractual Provisions Organizational Structure Control in Insurance Markets of
    Mayers
  • Ow Derivatives Usage in UK Non - Financial Listed Companies of
    Mallin
  • Survey into the Use of Derivatives by Large Non - Financial Firms Operating in
    De Ceuster
  • The Size Effect and Derivative Usage in Japan Working Paper Series in Finance Australian National University
    Heaney
  • Japan s Life Insurance Industry Gains Strength by Overcoming Financial Crisis of Capital Markets
    Inoue
  • The Size Effect and Derivative Usage in Japan Working Paper Series in Finance Australian National University
    Heaney
  • Risk Coordinating Corporate Investment and Financing Policies The of
    Froot