Costs and Benefits of Financial Regulation – An Empirical Assessment for Insurance Companies

Item Type Journal paper
Abstract

We analyse the costs and benefits of financial regulation based on a survey of 76 insurers from Austria, Germany and Switzerland. Our analysis includes both established and new empirical measures for regulatory costs and benefits. This is the first paper that tries to take costs and benefits combined into account using a latent class regression with covariates. Moreover, we analyse regulatory costs and benefits not only on an industry level, but also at the company level. This allows us to empirically test fundamental principles of financial regulation such as proportionality: the intensity of regulation should reflect the firm-specific amount and complexity of the risk taken. Our findings do not support the proportionality principle; for example, regulatory costs cannot be explained by differences in business complexity. One potential policy implication is that the proportionality principle needs to be more carefully applied to financial regulation.

Authors Eling, Martin & Pankoke, David Antonius
Journal or Publication Title The Geneva Papers on Risk and Insurance - Issues and Practice
Language English
Keywords Insurance, Regulation, Cost-Benefit Analysis, Proportionality Principle
Subjects business studies
HSG Classification contribution to scientific community
Refereed Yes
Date 2016
Publisher Palgrave Journals
Series Name WORKING PAPERS ON FINANCE
Volume 20
Number 1
Page Range 529-554
ISSN 1018-5895
Official URL https://link.springer.com/article/10.1057/gpp.2016...
Depositing User David Antonius Pankoke
Date Deposited 13 Jan 2015 10:41
Last Modified 19 Nov 2018 21:30
URI: https://www.alexandria.unisg.ch/publications/238472

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Citation

Eling, Martin & Pankoke, David Antonius (2016) Costs and Benefits of Financial Regulation – An Empirical Assessment for Insurance Companies. The Geneva Papers on Risk and Insurance - Issues and Practice, 20 (1). 529-554. ISSN 1018-5895

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https://www.alexandria.unisg.ch/id/eprint/238472
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