Financial innovation as a response to crisis - the case of catastrophe bonds

Natália Teixeira, Alexandre Correia, Rui Vinhas da Silva, Leandro Pereira and Sérgio Vinhas da Silva

Global Business and Economics Review, 2023, vol. 29, issue 3, 316-331

Abstract: Large fluctuations in stock markets, caused by financial problems that may originate in the sector itself, as was the case of the 2007-2009 crisis, or originate in other events, as was the case of the 2020 pandemic that led to a sharp drop in the stock market between the first and second quarter of that year, lead market players to look for instruments that can prevent large losses. This study aims to understand whether innovative instruments such as insurance-linked securities, more specifically catastrophe bonds, can be an alternative to other more traditional instruments. For this purpose, Pearson's coefficient was used to analyse the relationship between the Dow Jones average yearly rate of return variable, between 2001 and 2020, and bonds and securities issued in the USA, between 2001 and 2020. The results showed a strong or tending to strong positive correlation during a specific period of time.

Keywords: insurance-linked securities; ILS; catastrophe bonds; financial innovation; financial crisis; Pearson correlation coefficient. (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.inderscience.com/link.php?id=133289 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:gbusec:v:29:y:2023:i:3:p:316-331

Access Statistics for this article

More articles in Global Business and Economics Review from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().