1. Curbing systemic risk in the insurance sector: A mission impossible?
- Author
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Laura Nieri, Matteo Pelagatti, Andrea Piccini, Paola Bongini, Bongini, P, Nieri, L, Pelagatti, M, and Piccini, A
- Subjects
Insurance companies ,Moral hazard ,Regulatory reforms ,Sample (statistics) ,SECS-P/05 - ECONOMETRIA ,Systemic risk ,Event study ,Loss absorbency requirements ,Insurance companie ,Accounting ,0502 economics and business ,Economics ,Capital requirement ,050207 economics ,Finance ,050208 finance ,Actuarial science ,business.industry ,Regulatory reform ,05 social sciences ,Financial market ,Stock price ,SECS-P/11 - ECONOMIA DEGLI INTERMEDIARI FINANZIARI ,SECS-S/03 - STATISTICA ECONOMICA ,business - Abstract
This paper addresses the issue of systemic risk in insurance and investigates how financial markets evaluate the introduction of a new regulation addressed to global systemically important insurers (G-SIIs). We analysed the stock price reactions and the evolution of the distance-to-default of a sample of 44 of the world's largest insurers to the publication of the first list of 9 G-SIIs and the release of information regarding their new capital requirements and other policy measures. The results of our event study suggest that, overall, investors doubt the effectiveness of the new regulatory framework in reducing systemic risk in the insurance sector and curbing the moral hazard implications of a “too systemic to fail” policy.
- Published
- 2017
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