American Economic Review: Vol. 97 No. 3 (June 2007)
Print Article Summary Export Citation
Sign up for Email Alerts Follow us on Twitter
Regulation, Capital, and the Evolution of Organizational Form in US Life Insurance
Zanjani, George. 2007. "Regulation, Capital, and the Evolution of Organizational Form in US Life Insurance." American Economic Review, 97(3): 973-983.
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)
Article Full-Text Access