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<p>This article aims to disentangle the combined effect of internal corporate governance and market competition on risk-taking in the Indian insurance industry. Using data from 2014–2021, the study applies dynamic panel threshold regression and the two-step system GMM. Results reveal a strong risk dynamism and a non-linear relationship between internal governance, competition, and risk-taking in the Indian insurance industry. We note that adopting stringent governance helps only up to a certain threshold in managing risk effectively, and the standalone effect of competition confirms the “<i>Martinez-Miera and Repullo hypothesis</i>”. Notably, the study highlights a “<i>complementary</i>” relationship between internal governance and market competition, implying that internal governance is more effective in mitigating risk in a competitive environment. However, on the organisational front, our estimates hold a “<i>substitution hypothesis</i>” for life insurance firms and a “<i>complementary hypothesis</i>” for non-life insurance firms.</p>

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Do internal governance and competition matter to risk-taking in the Indian insurance industry? A dynamic approach

  • 期刊论文

  • 发表日期：

    2026年1月3日

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  • Barkha Goyal,
  • Rachita Gulati

摘要

This article aims to disentangle the combined effect of internal corporate governance and market competition on risk-taking in the Indian insurance industry. Using data from 2014–2021, the study applies dynamic panel threshold regression and the two-step system GMM. Results reveal a strong risk dynamism and a non-linear relationship between internal governance, competition, and risk-taking in the Indian insurance industry. We note that adopting stringent governance helps only up to a certain threshold in managing risk effectively, and the standalone effect of competition confirms the “Martinez-Miera and Repullo hypothesis”. Notably, the study highlights a “complementary” relationship between internal governance and market competition, implying that internal governance is more effective in mitigating risk in a competitive environment. However, on the organisational front, our estimates hold a “substitution hypothesis” for life insurance firms and a “complementary hypothesis” for non-life insurance firms.