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The Chinese life-insurance industry has experienced major structural changes in recent years, primarily because of increasing demand and the entry of foreign insurers. Although the market is clearly booming, the efficiency of its growth and development is unclear. In this paper, we evaluate the efficiency of life insurers operating in China and compare foreign firms with domestic firms. We find that foreign insurers have not brought efficiency into the Chinese market, and that the market is still dominated by domestic giants. However, the gap between foreign insurers and domestic insurers is narrowing. After testing hypotheses regarding scale economy, technical progress and potential improvements, we discuss several issues of importance to life insurers, market investors and government regulators. Copyright (c) 2009 The Authors Journal compilation (c) 2009 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

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Though ample empirical evidence demonstrates the relationship between objective financial literacy and retirement planning, we have a limited understanding of the role of individuals’ subjective financial literacy in their retirement planning. In this study, we examine how individuals’ financial literacy confidence bias affects their retirement planning behaviors using survey data in China. Based on the difference between respondents’ subjective and objective financial literacy from survey data, we construct measures of individuals’ financial literacy overconfidence and underconfidence for empirical analysis. Our results document the critical role of individuals’ assessment of financial literacy in their retirement planning. We find that individuals’ financial literacy overconfidence (underconfidence) significantly promotes (demotes) their retirement planning behaviors.