An Examination of the Biases in Estimating the Benefit of Debt Insurance

L Paul Hsueh and Y Angela Liu

The Financial Review, 1990, vol. 25, issue 3, 473-86

Abstract: This paper examines the biases in previous studies of estimating the benefit of debt insurance. The authors identify three possible sources of estimation biases: selection bias, marketability bias, and premium bias. The authors' findings indicate that both the selection bias and the marketability bias cause an underestimation of the actual benefit of bond insurance, while the premium bias results in an overestimation. Future research could benefit from this study by explicitly accounting for these estimating biases in obtaining a more accurate evaluation of the role of debt insurance in the market. Copyright 1990 by MIT Press.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:25:y:1990:i:3:p:473-86

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