Members of the student team who worked with finance faulty Weili Lu and Xiaoying Xie gather to discuss the successful effort to develop a database on more than 500 Asian insurance companies. Pictured, from left, are Vivian He, Byung-Ho Lee and Rakesh Mahto with Xie and Lu. Photo by Kelly Lacefield

Creating a New Research Tool

Database Shares Financial Information on Asian Insurance Companies

January 13, 2009

By Pamela McLaren

Two Cal State Fullerton business faculty members and a team of graduate students have developed the first database that carries financial information on more than 500 insurance companies operating throughout Asia.

The research was developed with the underwriting of Asian business daily, 21st Century Business Herald, and was presented in November to a group of more than 30 insurance executives and regulators in Bejing.

Weili Lu, director of the Mihaylo College of Business and Economics’ Center for Insurance Studies, accepted the task last year when she thought it would be a matter of buying data from various information-gathering organizations, analyzing and comparing the material and establishing a database.

Little did she realize that no such data had been collected. It had to be gathered from the agencies themselves. But as the project got more complicated, it also established opportunities for the associate professor of finance, fellow faculty member Xiaoying Xie and their research assistants.

The end result, the Asian Insurance Competence project, is a database of insurance agencies in 10 Asian countries and regions: China, Indonesia, Japan, Korea, Singapore, Hong Kong, Taiwan, Malaysia, India and Thailand.

“The biggest challenge was gathering financial data from each firm in each country for the last five years,” explained Lu, adding that some of the companies have very complicated ownerships that further challenged the team.

“The students worked really hard. They are from all over Asia, such as India, Korea, Taiwan, Hong Kong and China. Some even majored in Japanese. I’m very proud of what they were able to accomplish.”

“I am in charge of collecting and analyzing the data,” said Byung Ho “Charlie” Lee, the student research group leader and one of several business graduate students who are working on the ongoing project. “As I continue to conduct the research for the project, I am amazed by the size and potency of the Asian Insurance market.

“I am planning to go for a doctorate in the near future,” Lee added. “The lessons from this project provide me with confidence to conduct various methods of research for the Ph.D. program. I am sure that all of the lessons are very precious assets for my future career and study.”

Xie, an assistant professor of finance, developed a six-ratio test looking at each company’s profitability, stability, liquidity, loss reserves, market size and capitalization of each firm.

“The project required substantial work on data collecting, mining and analysis,” said Xie. “We also needed to deal with different accounting rules across different countries.”

The end result is a one-of-a-kind database that has become a research tool for any and all interested in studying the Asian insurance market.

“The study is but the first of an annual ongoing study of these companies,” said Lu, who presented the team’s findings last November in Beijing at the 21st Century Asia Finance meeting before an audience of approximately 300 insurance executives and regulators. The team’s findings will eventually be published in a booklet by the newspaper.

“With its interesting design, broad scope and the unique dataset, the project will definitely enhance the reputation of Cal State Fullerton in the area of insurance research, especially insurance research of Asian countries,” agreed Xie.