Insurance Literacy and Spatial Diffusion in the Life Insurance Market: A Subnational Approach in Romania

In most Eastern European countries, the life insurance market is poorly developed with respect to the income level of their citizens. Most of the academic literature investigating the determinants of this market focuses on cross-country- or individual-level studies. Our research assesses the specifi...

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Bibliographic Details
Published inEastern European economics Vol. 57; no. 5; pp. 375 - 396
Main Authors Mare, Codruta, Laura Dragoș, Simona, Dragotă, Ingrid-Mihaela, Dragoș, Cristian Mihai
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 03.09.2019
Taylor & Francis Ltd
Subjects
Counties
Demand for life insurance
Economic theory
Economics
Financial literacy
insurance literacy
Life insurance
Literacy
Markets
Romania
spatial diffusion
Unemployment insurance
Urbanization
Eastern Europe
Romania
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Summary:In most Eastern European countries, the life insurance market is poorly developed with respect to the income level of their citizens. Most of the academic literature investigating the determinants of this market focuses on cross-country- or individual-level studies. Our research assesses the specificities of the life insurance market at a subnational level, more specifically at the county level. The behavioral mechanisms are highlighted through cross-section linear regressions with spatial interactions on a database of 42 counties in Romania in 2015. One important result is the positive effect of insurance literacy, estimated in a national survey, on the demand for life insurance. Another significant result is the spatial diffusion process identified in life insurance density between neighboring counties. Among the control variables, we identified a significant positive impact of income and urbanization on the demand for life insurance and a negative impact of the unemployment rate.
ISSN:0012-8775
1557-9298
DOI:10.1080/00128775.2019.1618194