American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Regulation, Capital, and the Evolution of Organizational Form in US Life Insurance
American Economic Review
vol. 97,
no. 3, June 2007
(pp. 973–983)
Abstract
This paper studies the association between regulation and the organizational form of new life insurers between 1900 and 1949. The mutual form was popular in states with low initial capital requirements for mutual companies and differentially higher requirements for stock companies, but was rarely used elsewhere. This suggests that entrepreneurs took a "path of least resistance" when choosing organizational form and that the mutual's disadvantage in raising capital contributed to its decline–a decline that accelerated as states raised requirements and eliminated the aforementioned differentials. Contrary to previous analysis, the paper finds little evidence connecting other regulations to mutual decline. (JEL G21, L51, N21, N22)Citation
Zanjani, George. 2007. "Regulation, Capital, and the Evolution of Organizational Form in US Life Insurance." American Economic Review, 97 (3): 973–983. DOI: 10.1257/aer.97.3.973Additional Materials
JEL Classification
- G22 Insurance; Insurance Companies; Actuarial Studies
- L51 Economics of Regulation
- N21 Economic History: Financial Markets and Institutions: U.S.; Canada: Pre-1913
- N22 Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-