Does Gibrat’s law hold in the insurance industry of china? A test with sequential panel selection method

Panoeconomicus

关键词: Gibrat’s law;    sequential panel selection method;    insurance;    China;   

DOI  :  10.2298/PAN1203311P

来源: DOAJ

【 摘 要 】

This study applies the Sequential Panel Selection Method to investigatewhether the growth rate of total insurance premium is independent of theirsize, as postulated by Robert Gibrat’s (1931) Law of Proportionate Effects.Time-series data for the total insurance premium of 35 insurance companies inChina during the December 2005 to May 2011 period are used. Since otherpanel-based unit root tests are joint tests of a unit root for all members ofa panel and are incapable of determining the mix of I(0) and I(1) series in apanel setting, the SPSM, proposed by Georgios Chortareas and GeorgeKapetanios (2009), classifies a whole panel into a group of stationary seriesand a group of non-stationary series. In doing so, we can clearly identifyhow many and which series in the panel are stationary processes. Theempirical results from the SPSM tests unequivocally indicate that Gibrat’sLaw is only valid for one of these 35 companies studied here. Our study hasimportant policy implications for insurance regulation, insurance marketconstruction, and policyholder protection.

【 授权许可】

Unknown