When gambling for resurrection is too risky

Divya Kirti

No 69, ESRB Working Paper Series from European Systemic Risk Board

Abstract: Rather than taking on more risk, US insurers hit hard by the crisis pulled back from risk taking, relative to insurers hit less hard by the crisis. Capital requirements alone do not explain this risk reduction: insurers hit hard reduced risk within assets with identical regulatory treatment. State level US insurance regulation makes it unlikely this risk reduction was driven by moral suasion. Other financial institutions also reduce risk after large shocks: the same approach applied to banks yields similar results. My results suggest that, at least in some circumstances, franchise value can dominate, making gambling for resurrection too risky. JEL Classification: G22, G21, G32, G28

Keywords: banking; financial frictions; franchise value; life insurance; risk shifting (search for similar items in EconPapers)
Date: 2018-02
New Economics Papers: this item is included in nep-rmg
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: When gambling for resurrection is too risky (2024)
Working Paper: When Gambling for Resurrection is Too Risky (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:srk:srkwps:201869

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