Investment

International

  investment

  in

  Insurance

 Services

 in

 the

 US

Fins

 5516—International

 Corporate

 Finance

Wanyi GE 3356068 Yue SONG 3356057 Dong SHI 3357985

Abstract

The purpose of this study is to analyze and measure the determinants of foreign direct investment (FDI) in insurance services in the US. This study indicates that solid economic fundamentals in the host countries are the major factors that expend FDI in insurance services, while the uncertainty of the international exchange market increases the investment risk and reduces foreign investors’ willingness to invest. The empirical results of this study indicate that the relative cost of capital (RR) and FDI in manufacturing in the US (MF) contribute to the expansion of FDI in insurance services, while the relatively higher wages, larger source countries’ insurance market size and higher exchange rate risk in the host countries discourage FDI in insurance services. Furthermore, the empirical results suggest that FDI in insurance services is a substitute for FDI in banking in the US.

2

Table

 of

 Content

Abstract

 ..................................................................................................................

 2

  Table

 of

 Content

 .....................................................................................................

 3

  1.0

  Introduction

 ..................................................................................................

 4

  2.0

  Literature Review

 .........................................................................................

 5

  3.0 Data and methodology

 ...................................................................................

 10

  4.0 Empirical Findings...