Costs and Benefits of Financial Regulation – An Empirical Assessment for Insurance Companies
Journal
The Geneva Papers on Risk and Insurance - Issues and Practice
Series
WORKING PAPERS ON FINANCE
ISSN
1018-5895
Type
journal article
Date Issued
2016
Author(s)
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.
Language
English
Keywords
Insurance
Regulation
Cost-Benefit Analysis
Proportionality Principle
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Palgrave Journals
Volume
20
Number
1
Start page
529
End page
554
Subject(s)
Division(s)
Eprints ID
238472
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Name
Costs and Benefits of Financial Regulation – An Empirical Assessment for Insurance Companies.pdf
Size
373.28 KB
Format
Adobe PDF
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