Determinants of insurance market attractiveness for foreing investments: The case of ex-Yugoslavia

Abstract

The aim of this paper is to investigate factors that influence the attractiveness of insurance market for foreign insurers in case of ex-Yugoslavia region. We use country-specific fixed effects models for panel data that covers five countries during the period 2004-2008, allowing each cross-sectional unit to have a different intercept term serving as an unobserved random variable that is potentially correlated with the observed regressors. The research results indicate that the main forces affecting market attractiveness are insurance demand and human capital. These findings provide significant implications for local governments and for both, foreign and domestic insurers.