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Reinsurance Demand and Liquidity Creation

Georges Dionne and Denise Desjardins ()
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Denise Desjardins: HEC Montreal, Canada Research Chair in Risk Management

No 17-3, Working Papers from HEC Montreal, Canada Research Chair in Risk Management

Abstract: This paper analyzes the relation between insurers’ liquidity creation and reinsurance demand. The empirical measure of liquidity creation was developed for banks by Berger and Bouwman (2009), who distinguished two important bank activities: liquidity creation and risk transformation. Insurers also actively transform risk, but the extent of their engagement in liquidity creation is less clear. Because liquidity creation is a risky activity, it may affect the demand for reinsurance. The goal of this study is to analyze how liquidity creation affects demand for reinsurance.

Keywords: Liquidity creation; reinsurance; risk transformation; insurance (search for similar items in EconPapers)
JEL-codes: G21 G22 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-rmg
Date: 2017-02-23
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Persistent link: https://EconPapers.repec.org/RePEc:ris:crcrmw:2017_003

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