Abstract
This article analyzes the relationship between inflation, increase of investment in fixed assets, monetary policy, financial openness, national savings, macro-economic climate index, deposit rate, and the development of insurance industry in China. We set the incremental indicators as the variables and constructed an analysis integrating a multiple linear regression, stepwise regression, and robustness analysis, and used historical monthly data sample during the period of January 2004 to December 2017 for empirical analysis. The result indicates that (a) the national savings and macro-economic climate index are the major factors that influence the development of insurance industry in China by now; (b) to improve the development of insurance industry, both the economic growth and people’s income should continue to advance; and (c) financial openness should be paid more attention to, which is insufficient, and there is lack of competitive vitality in the whole insurance market.
Highlights
Insurance constitutes an integral part of finance, the healthy development and safety of insurance industry are of great significance to the social and economic development in a country, which even involve the safety and stability of the whole community to a certain degree
The process can be expressed as three parts, as follows: 1. Construct an initial model and check the multi-collinearity: a multiple linear regression is applied to build the initial model as: y where y is the value of leading indicator to evaluate the development of insurance industry, xn, n = 1, 2, are the values of the factors influencing the development of insurance industry, and ε is a random error term which meets the general classical hypothesis of econometrics
A multiple linear regression is applied to construct the initial model to analyze the relationship between the year-on-year growth rate of consumer price index (CPI) of the current month ( RCPI ), the increase of investment in fixed assets ( IIFA ), the financial openness ( Openness fin ), the national savings ( NS ), the macro-economic climate index ( EImacro ), the 1-year deposit rate, and the premium income ( PI ) which indicate the development of insurance industry in China
Summary
Insurance constitutes an integral part of finance, the healthy development and safety of insurance industry are of great significance to the social and economic development in a country, which even involve the safety and stability of the whole community to a certain degree. In terms of insurance depth, density of China is weak, which represents that the development depth and breadth of insurance industry of China is weak. In 2016, the insurance density of China was US$377 per person, while the average insurance density of the world was US$621 per person, which is almost twice as high as China. The insurance depth of China was 4.1%, while the average insurance depth of the world was 6.1% (Hu, 2018). It is obvious that there is a big gap between China and the average level of the world.
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