DOES OWNERSHIP STRUCTURE MATTER? A COST EFFICIENCY STUDY OF LIFE INSURANCE FIRMS IN INDONESIA
Abstract
This paper is about the cost and profit efficiency of Indonesia’s life insurance industry. Using data from 2010–2014, we compare cost and profit efficiency among local and joint venture insurers. Our empirical analysis, based on a time-invariant translog cost model, reveals mean cost allocation and profit efficiency scores of 0.36 and 0.52, respectively. Interestingly, we find that domestic insurers are more cost efficient compared to joint venture insurers; however, joint venture insurers maximize profit more.
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Buletin Ekonomi Moneter dan Perbankan / Bulletin of Monetary Economics and Banking is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.