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American Economic Review: Vol. 97 No. 3 (June 2007)
AER Volume. 97, Issue 3 | 
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Regulation, Capital, and the Evolution of Organizational Form in US Life Insurance
Article 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.97.3.973
DOI: 10.1257/aer.97.3.973
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)
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Download Data Set (40.36 KB) | Link to Appendix (313.37 KB)
Authors
Zanjani, George
