Greenfield foreign direct investments and insurance market diversification: a cross-country analysis

Foreign direct investments (FDIs) influence insurance markets directly, through foreign insurers' participation in domestic markets, and indirectly, through cross-sectoral spillover effects. This article focuses on the indirect effects and examines the relationship between greenfield FDIs and diversification in European insurance markets. Using panel data of 28 countries for the period 2004-2019, we find that greenfield FDIs induce greater diversification of insurance markets. Our results suggest a non-linear relationship and potential mediating effects of financial development on the FDI-insurance relationship. Robustness tests using different measures of market diversification, model specifications and averaging of the data show consistent results.