The Hungarian insurance market structure: an empirical analysis. (English) Zbl 07722452
Summary: This paper analyzes the market structure of the Hungarian insurance market, which operated as a monopoly market until 1986. After the regime change this sector started to develop rapidly. But the Hungarian insurance market has a strong oligopolistic character, and thus raises an interesting question as to how close the market is to a state of perfect competition. Based on J. C. Panzar and J. N. Rosse’s [“Testing for ’monopoly’ equilibrium”, J. Ind. Econ. 35, No. 4, 443–456 (1987)] methodology we estimate the elasticity of total revenues with respect to changes in input prices, so that we can determine the market structure. The estimation of input price elasticity is made with a static and a dynamic panel model. According to research the structure of the Hungarian insurance market significantly differs from the perfect competition case between 2010 and 2019. The market is in long-run equilibrium, and the hypothesis of the monopoly case cannot be rejected. The market structure of a sector is important for modelling phenomena and new regulations effectively, which is relevant for insurance and competition supervision in the protection of customers.
MSC:
| 90Bxx | Operations research and management science |
References:
| [1] | Alhassan, AL; Biekpe, N., Competition, and efficiency in the non-life insurance market in South Africa, J Econ Stud, 43, 6, 882-909 (2016) · doi:10.1108/JES-07-2015-0128 |
| [2] | Alhassan, AL; Biekpe, N., Liberalization outcomes and competitive behaviour in an emerging insurance market, Afr Dev Rev, 29, 2, 122-138 (2017) · doi:10.1111/1467-8268.12245 |
| [3] | Arellano, M.; Bond, S., Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations, Rev Econ Stud, 58, 2, 277-297 (1991) · Zbl 0719.62116 · doi:10.2307/2297968 |
| [4] | Banyár, J.; Turi, P., A biztosítási fogyasztóvédelmi szemlélet evolúciója Magyarországon the evolution of the insurance consumer protection approach in Hungary, Pénzügyi Szemle, 2, 191-209 (2019) |
| [5] | Bikker, JA; Haaf, K., Competition, concentration and their relationship: an empirical analysis of the banking industry, J Bank Finance, 26, 2191-2214 (2002) · doi:10.1016/S0378-4266(02)00205-4 |
| [6] | Bikker, JA; Van Leuvensteijn, M., Competition and efficiency in the Dutch life insurance industry, Appl Econ, 40, 16, 2063-2084 (2008) · doi:10.1080/00036840600949298 |
| [7] | Bikker, JA; Shaffer, S.; Spierdijk, L., Assessing competition with the Panzar-Rosse model: the role of scale, costs, and equilibrium, Rev Econ Stat, 94, 4, 1025-1044 (2012) · doi:10.1162/REST_a_00210 |
| [8] | Camino-Mogro, S.; Armijos-Bravo, G.; Cornejo-Marcos, G., Competition in the insurance industry in ecuador: an econometric analysis in life and non-life markets, Quart Rev Econ Finance, 71, 291-302 (2019) · doi:10.1016/j.qref.2018.10.001 |
| [9] | Coccorese, P., Assessing the competitive conditions in the Italian banking system: some empirical evidence, BNL Quart Rev, 205, 171-191 (1998) |
| [10] | Coccorese, P., Information exchange as a means of collusion: the case of the Italian car insurance market, J Ind Compet Trade, 10, 55-70 (2010) · doi:10.1007/s10842-008-0047-9 |
| [11] | Council Regulation (2004) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (Text with EEA relevance), Official Journal L 024 , 29/01/2004 P. 0001-0022, https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32004R0139&from=hu, download: 2022.06.25. |
| [12] | Csorba G (2007) A fúziókontroll módszertanáról. Dominancia- vagy versenyhatásteszt? In: Verseny és szabályozás 2007, (On the methodology of merger control. Dominance or competition test? In: Competition and Regulation 2007), http://www.econ.core.hu/kiadvany/vesz.html |
| [13] | Goddard, J.; Wilson, JO, Competition in banking: a disequilibrium approach, J Bank Finance, 33, 12, 2282-2292 (2009) · doi:10.1016/j.jbankfin.2009.06.003 |
| [14] | Iwata, G., Measurement of conjectural variations in oligopoly, Econometrica, 42, 5, 947-966 (1974) · doi:10.2307/1913800 |
| [15] | Jeng, VSC, Competition and its variation over time: an empirical analysis of the Chinese insurance industry, Geneva Pap Risk Insur Issues Pract, 40, 4, 632-652 (2015) · doi:10.1057/gpp.2015.4 |
| [16] | Kasman, A.; Turgutlu, E., Competitive conditions in the Turkish non-life insurance industry, Rev Middle East Econ Finance, 4, 1, 1-16 (2008) · doi:10.2202/1475-3693.1071 |
| [17] | Knezevic, S.; Markovic, M.; Brown, A., Measuring the efficiency of Serbian insurance companies, Acta Oecon, 65, 1, 91-105 (2015) · doi:10.1556/AOecon.65.2015.1.5 |
| [18] | Kovács N (2011) A piaci erő közvetett mérése a biztosítási piacon (Indirect measurement of market power in the insurance market), Széchenyi István Egyetem Regionális és Gazdaságtudományi Doktori Iskola doktori értekezés. |
| [19] | Kozmenko, O.; Merenkova, O.; Boyko, A., The analysis of insurance market structure and dynamics in Ukraine, Russia and European Insurance and Reinsurance Federation the analysis of insurance market structure and dynamics in Ukraine, Russia and European Insurance and Reinsurance Federation (CEA) member states, Probl Perspect Manag, 7, 1, 2009 (2009) |
| [20] | Kramaric, TP; Kitic, M., Comparative analysis of concentration in insurance markets in new EU member states, world academy of science, Eng Technol Int J Social Behav Educ Econ Bus Ind Eng, 6, 6, 1322-1326 (2012) |
| [21] | MABISZ (2019) Magyar Biztsoítók Évkönyve. Budapest: Magyar Biztosítók Szövetsége. Yearbook of Hungarian Insurance Companies: Hungarian Insurance Association |
| [22] | Madari Z, Szádoczkiné VV (2021) Empirical analysis of the Hungarian insurance market. In: Drobne S, Stirn LZ, Kljajić BM, Povh J, Žerovnik J Proceedings of the 16th International Symposium on Operational Research in Slovenia. Slovenian Society Informatika, Ljubljana, pp 125-129 |
| [23] | Maudos, J.; de Guevara, JF, The cost of market power in banking: social welfare loss vs. cost inefficiency, J Bank Finance, 31, 2103-2125 (2007) · doi:10.1016/j.jbankfin.2006.10.028 |
| [24] | Molyneux, P.; Lloyd-Williams, DM; Thornton, J., Competitive conditions in European banking, J Bank Finance, 18, 3, 445-459 (1994) · doi:10.1016/0378-4266(94)90003-5 |
| [25] | Murat, G.; Tonkin, RS; Jüttner, DJ, Competition in the general insurance industry, German J Risk Insur, 91, 3, 453-481 (2002) |
| [26] | Nathan, A.; Neave, EH, Competition and contestability in Canada’s financial system: empirical results, Can J Econ Revue Canadienne D’economique, 22, 3, 576-594 (1989) |
| [27] | Panzar, JC; Rosse, JN, Testing for ’monopoly’ equilibrium, J Ind Econ, 35, 4, 443-456 (1987) · doi:10.2307/2098582 |
| [28] | Shaffer, S., Non-structural measures of competition toward a synthesis of alternatives, Econ Lett, 12, 349-353 (1983) · doi:10.1016/0165-1765(83)90061-7 |
| [29] | Simpasa AM (2013) Competition and market structure in the Zambian banking sector. African Development Bank Group, Working Paper 168 |
| [30] | Solvency II (2009): DIRECTIVE 2009/138/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) |
| [31] | Szüle, B., Solvency effects of taxation: a comparison of Hungarian banks and insurance companies, Acta Oecon, 67, 1, 63-75 (2017) · doi:10.1556/032.2017.67.1.4 |
| [32] | Tipuric, D.; Bach, MP; Pavic, T., Concentration of the insurance industry in selected transition countries of Central and Eastern Europe, 1998-2006, Post Communist Econ, 20, 1, 97-118 (2008) · doi:10.1080/14631370701865755 |
| [33] | Todorov, AB, Assessing competition in the Bulgarian insurance industry: a Panzar-Rosse approach, Int J Econ Financ Issues, 6, 3, 872-879 (2016) |
| [34] | Uddin, G.; Oserei, K.; Oladipo, O.; Ajayi, D., Industry competitiveness using firm-level data: a case study of the Nigerian insurance sector, Adv Panel Data Anal Appl Econ Res (2018) · doi:10.1007/978-3-319-70055-7_37 |
| [35] | Wooldridge JM (2012) Introductory Econometrics a modern approach 5th Edition |
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.
