Development Under Regulation: The Way of the Ukrainian Insurance Market

This study is intended to assess the introduction of increased capitalization requirements in Ukrainian insurance firms. To do so, the paper employs up-to-date frontier efficiency analysis. The analysis suggests that an increase in size occurs not only because of the regulator’s requirements, but also because all scale inefficient firms have been persistently operating under increasing returns to scale. The analysis identifies the winners and losers among small, medium and large companies. The findings are consistent with the hypothesis that regulation forces firms to concentrate on efficiency.