Investigators from International Monetary Fund Zero in on Insurance (When Gambling for Resurrection Is Too Risky): Insurance

NewsRx Policy and Law Daily

2024 JUN 03 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Investigators discuss new findings in Insurance. According to news reporting out of Washington, District of Columbia, by NewsRx editors, the research stated, “The financial crisis pushed some large life insurers to the brink of insolvency. Instead of gambling for resurrection, insurers in severe distress pulled back from risk taking.”

Our news journalists obtained a quote from the research from International Monetary Fund, “They systematically reduced risk appetite relative to insurers with low default probabilities across many jointly available individual incremental investment opportunities. Importantly, as insurers in distress reduced risk even within investment opportunities with identical treatment, regulatory constraints alone cannot explain these findings. This evidence suggests that franchise value can make gambling for resurrection too risky, even following severe shocks to large financial institutions’ solvency.”

According to the news editors, the research concluded: “Actions that clarify future prospects, like stress tests, may be needed to support risk appetite during crises.”

This research has been peer-reviewed.

For more information on this research see: When Gambling for Resurrection Is Too Risky. Journal of Banking & Finance, 2024;162. Journal of Banking & Finance can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Journal of Banking & Finance - http://www.journals.elsevier.com/journal-of-banking-and-finance/)

Our news journalists report that additional information may be obtained by contacting Divya Kirti, International Monetary Fund, Washington, DC 20431, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jbankfin.2024.107125. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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