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On The Life Insurance Fund And Stock Market

Posted on:2002-03-17Degree:MasterType:Thesis
Country:ChinaCandidate:X Y GaoFull Text:PDF
GTID:2206360032954830Subject:Finance
Abstract/Summary:PDF Full Text Request
Since the recovery of the life insurance operation in 1981, the Chinese life insurance industry has been making great progress. The supply sides, market scale, asset amount, inter-media and regulatory agency all face a delighting increase or growth. However, there still exist comparatively restrictive policy on the investment of the life insurance fund. Insurance Act claims that insurance company could only invest its fund in the following products: bank deposits, government security trading, financial security and other government defined forms of investment. Insurance companies are prohibited from owning security trading firm or investing directly in companies. The serial lowering of interest rate expands the life insurance companies' reverse rate gap. The solution of only depending on the interest income of bank deposit to protect and increase the value of the life insurance fund seems a mission impossible. What's worse, it will deteriorate the liquidity ability of the life insurance companies. Therefore, to launch a new area for the investment of the life insurance fund becomes the priority.Confronting the tough environment, the supervisor takes the following positive measures according to the changing economic conditions: the central bank allows insurance companies to enter the inter-bank borrowing market in the October of 1998; the treasury house issued over 6-billion targeted treasury notes for several commercial insurance companies in 1998; insurance companies are allowed to purchase AA+ rank central enterprise bonds in the July of 1999; insurance companies are allowed to invest securities investment fund in the October of 1999.The above policies create a quite friendly beginning for the investment of life insurance fund. Especially the opening of stock market for insurance fund indicates that the restriction on investment of life insurance fund will be eliminated. On the one hand, stock market increases the liquidity and profitability of insurance fund. On the other hand, the long-term, stability and large-scale of the insurance fund enhance the efficiency, improve the resource allocation efficiency and encourage the financial innovation of the stock market. This dissertation is under the guide of the Marxism economic theory, depending on the western free-market theory, utilizing the theoretical analyses, positivistic methodologies and comparative analyses, and surveys the macro- and micro- relationship between the insurance fund and stock market. The research rout is: first, investigate the insurance fund and stock market development; then, analyze the income and risk of insurance funds investing in closed-end fund; and finally, some exploratory thoughts on the dynamic interactive relationship between life insurance fund and stock market. The structure of the article is to put the development of life insurance fund and stock market as the first chapter; the second chapter is the analysis on the method of investing the life insurance fund in the stock market; the third part is the interaction between the life insurance fund and stock market. The development of the life insurance fund and the stock market is the starting point of my article. First, we analyze the source, characteristics and the principles of investment of life insurance fund in a micro view. The long term, stability and large scale of life insurance fund determine the vital significance to the long-term development of the stock market. Secondly, we briefly introduce the current issue of the life insurance industry and stock market, and discuss the efficiency, risk profile and the origin of Chinese stock market. Then, utilizing the comparative methodology, we introduce the development of the life insurance industry and stock market of developed countries, to further conclude that there exists complementary relationship between them. The second part analyzes the life insurance fund's indirect entering stock market. First, we introduce the current situation of purchasing closed-end fund. Second, we su...
Keywords/Search Tags:Life insurance fund, Stock market, Closed-end fund, Opened-end fund.
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