Influencing Factors Of Liquidity Of Property Insurance Companies And The Dynamic Adjustment Speed Under The Trade-off Theory

The liquidity risk is defined under the "C-ROSS" as that the risk of the insurance company cannot obtain sufficient funds in time or at a reasonable cost to pay the due debt or fulfilling other payment obligations.The main business activities of the insurance industry are basically cash transactions,such as collecting premiums and paying premiums.This allows insurers to quickly realize their assets to cover claims,to maintain a reasonably safe liquidity level.When an insurance company cannot afford liquidity risk,the company's operations are unsustainable and solvency supervision will begin to intervene.If the company wants immediate liquidity,it must pay a high fee,which will have a very negative impact on the company's operations.In order to prevent the liquidity risk and the liquidity shortage caused by the decline of the solvency of insurance companies,the influencing factors of the liquidity level of insurance companies are the objects that we must pay special attention to and the adjustment costs faced.Different companies have different characteristics and macro environment due to the company.It is also different,so it shows different speed adjustments.Its speed is directly related to the company's investment and financing opportunities and the ability to pay.It is one of the focuses of modern enterprises.The study of the factors affecting liquidity and the understanding of the rules of liquidity adjustment behavior have positive significance for helping insurance companies to better manage liquidity,and provide certain measures for the company's decision-making level to strengthen.liquidity management,investors and regulatory authorities to judge the company.Regulators pay attention to the liquidity risk problem of the financial industry,and successively released a series of documents related to liquidity risk in the past two years.For example,the "Notice of the China Insurance Regulatory Commission on Further Strengthening the Risk Prevention and Control of the Insurance Industry" lists liquidity risk as the top nine in the field of risk prevention and control,the revised version of the "Administrative Measures for Insurance Protection Funds" and the" provision of liquidity by the Insurance Protection Fund.Supporting the Interim Measures(Draft for Comment)",first proposed the insurance support fund's liquidity support for insurance companies and clearly defined the operation content."The Measures for the Management of Liquidity Risk of Commercial Banks further differentiated the liquidity risk management of commercial banks".The establishment of quantitative regulatory standards emphasizes the use of risk management and regulation.This paper analyzes the non-equilibrium panel data of China's property and casualty insurance companies from 2010 to 2018,considering the parameters heterogeneity,using the non-additive fixed effect panel quantile regression model to study the influencing factors of the different liquidity levels of Chinese property insurance companies.The empirical results show that the company scale and return on assets have a negative impact on the liquidity level;the reinsurance rate,cash flow,business concentration,capital structure,business growth rate,and overall impact of CPI are positive,but the impact of different quantile levels There are significant differences in the degree.In addition,the tendency of some variables to support the theory of trade-offs,which basically verifies the application of trade-off theory in the insurance industry.Based on the trade-off theory,this paper constructs the dynamic adjustment model of the liquidity of China's property and casualty insurance companies through the relationship between the influencing factors and the liquidity level,and studies the behavior of the property insurance companies' partial adjustment of liquidity to the target liquidity level under different liquidity levels.Property and casualty companies with low liquidity levels are adjusting faster than high-liquidity property and casualty insurance companies;property insurance companies at high levels are the slowest.It is also added that it has a target liquidity interval,that is,its liquidity behavior is in line with the trade-off theory.Finally,the current "second-generation" liquidity risk supervision policy is also proposed to improve.Based on the difference in estimation results at different grading levels,property and casualty companies with different company characteristics and business characteristics may have differences in the maintenance of liquidity levels,resulting in differences in the liquidity level affected by some factors and their adjustments.Therefore,drawing on the idea of commercial bank liquidity risk supervision,this paper proposes a differentiated supervision method for the relative rating of China's insurance liquidity risk supervision,which improves the liquidity level of the property insurance companies and the regulatory supervision of the liquidity for reference.