Total factor productivity using Malmquist DEA on selected ASEAN-5 life insurers from 2007 to 2021: An analysis

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ID: 286176
2023
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Abstract
Banks are not the only main components of having a healthy financial system, but non-bank institutions also play their specific roles to aid its strength and security. As such, regulators, government, and economists are wary especially when a crisis arises. This paper studied the efficiency of selected life insurance companies from the ASEAN-5 region mainly: Indonesia, Singapore, the Philippines, Thailand, and Malaysia in terms of their total factor productivity and Malmquist sub-indices from 2007 - 2021. The duration of the study was separated into three periods. These periods are pre-GFC, post-GFC/pre-Covid, and during COVID. The study used operating expense, total equity, and total liability, investment revenue, and insurance revenue as variables. The variables were simulated through the Malmquist productivity index using data envelopment analysis. The results of the study found that all of the selected life insurance companies were efficient across all indices over the duration of the study’s timeframe. Moreover, changes in technical efficiency, technological efficiency, and pure technical efficiency were found to be significant during GFC to post-GFC and pre-COVID to post-COVID. In addition to that, there was a significant difference in total factor productivity between the pairings of some countries. This study may serve as a guide for life insurance companies in the ASEAN-5 region to identify what area of their organization should be strengthened and safeguarded especially when there is a crisis. As a final benefit, this is also meant to help legislators and regulators create better rules and procedures for the life insurance industry.
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Authors Uy, Jon Calvin C.
Journal Malay Journal
Year 2023
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