Causality in Empirical Analyses with Emphasis on Asymmetric Information and Risk Management

Georges Dionne ()

A chapter in Handbook of Insurance, 2025, pp 361-400 from Springer

Abstract: Abstract We discuss the difficult question of measuring causality effects in empirical analyses, with applications to asymmetric information and risk management. It is now well documented in the economic literature that policy analysis must be causal. Hence, the measurement of its effects must also be causal. After presenting the main frameworks for causality analysis, including instrumental variables, difference-in-differences, and the generalized method of moments, we analyze the following questions: Does risk management affect firm value and risk? Do we face a moral hazard problem in insurance data? How can we separate moral hazard from adverse selection and asymmetric learning? Is liquidity creation a causal factor for reinsurance demand? We show that residual information problems are often present in different markets, while risk management may increase firm value when appropriate methodologies are applied. Finally, liquidity creation increases reinsurance demand.

Keywords: Asymmetric information; Moral hazard; Adverse selection; Risk learning; Risk management; Causality test; Dynamic data; Essential heterogeneity; Difference-in-differences; Instrumental variable; Propensity score; Generalized method of moments (search for similar items in EconPapers)
JEL-codes: C12 C18 C23 C25 C26 D80 G11 G22 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Causality in empirical analyses with emphasis on asymmetric information and risk management (2023)
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:spr:sprchp:978-3-031-69561-2_13

Ordering information: This item can be ordered from
http://www.springer.com/9783031695612

DOI: 10.1007/978-3-031-69561-2_13

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().