Life insurance policyholder protection, government green subsidy, and cap-and-trade transactions in a black swan environment

Shi Chen, Fu-Wei Huang and Jyh-Horng Lin

Energy Economics, 2022, vol. 115, issue C

Abstract: Previous research has examined the cap-and-trade mechanism with carbon emission reduction for productive firms. This paper encompasses the earlier studies by integrating borrowing firms (productive firms) conducting cap-and-trade transactions with life insurer lending decisions in a black swan environment. Our research provides the first cap call option model to describe the insurer-borrowing firm situation. In particular, we find that a black swan event stimulates life insurance businesses. The cap-and-trade scheme increases the guaranteed rate of the life insurance policy and policyholder protection. Enhancing the subsidy for the green borrowing firm deteriorates the policyholder protection in a black swan environment.

Keywords: Policyholder protection; Green subsidy; Cap-and-trade; Black swan (search for similar items in EconPapers)
JEL-codes: G13 G22 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:115:y:2022:i:c:s0140988322004625

DOI: 10.1016/j.eneco.2022.106333

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