Risk-Based Capital and Firm Risk Taking in Property-Liability Insurance
Jiang Cheng () and
Additional contact information
Jiang Cheng: School of Finance, Shanghai University of Finance and Economics, 777 Guoding Road, Tongde Building 317, Shanghai 200433, China.
The Geneva Papers on Risk and Insurance - Issues and Practice, 2013, vol. 38, issue 2, 274-307
This research investigates the relationship between capital and risk in property-liability insurers from 1993 to 2007. Three-stage least squares estimation is used to investigate the relationship between capital and two types of risk: underwriting and asset risk. Overall the results suggest that risk and capital are positively related, so that capital increases are associated with increases in investment and underwriting risk. This positive relationship was not consistently significant in 1993, prior to the implementation of risk-based capital (RBC) requirements. Both under-capitalised insurers and marginally adequately capitalised insurers adjusted their capital and risk towards firm targets at a higher speed than well-capitalised insurers in the post-RBC period. But underwriting and asset risk also increased for less well-capitalised insurers.
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
http://www.palgrave-journals.com/gpp/journal/v38/n2/pdf/gpp20132a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/gpp/journal/v38/n2/full/gpp20132a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pal:gpprii:v:38:y:2013:i:2:p:274-307
Ordering information: This journal article can be ordered from
Access Statistics for this article
The Geneva Papers on Risk and Insurance - Issues and Practice is currently edited by Christophe Courbage
More articles in The Geneva Papers on Risk and Insurance - Issues and Practice from Palgrave Macmillan, The Geneva Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().