New Data from University of Duisburg-Essen Illuminate Findings in Investment (Trading and Liquidity In the Catastrophe Bond Market): Investment

2022 OCT 27 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Current study results on Investment have been published. According to news reporting out of Duisburg, Germany, by NewsRx editors, research stated, “We provide first insights into secondary market trading, liquidity determinants, and the liquidity premium of catastrophe bonds. Based on transaction data from TRACE (Trade Reporting and Compliance Engine), we find that cat bonds are traded less frequently during the hurricane season and more often close to maturity.”

Financial support for this research came from German Insurance Science Association.

Our news journalists obtained a quote from the research from the University of Duisburg-Essen, “Trading activity indicates that the market is dominated by brokers without a proprietary inventory. Liquidity is high in periods of high trading activity in the overall market and for bonds with low default risk or close to maturity, which results from lower order processing costs.”

According to the news editors, the research concluded: “Finally, using realized bid-ask spreads as a liquidity measure, we find that on average, 21% of the observable yield spread on the cat bond market is attributable to the liquidity premium, with a magnitude of up to 141 bps for high-risk bonds.”

This research has been peer-reviewed.

For more information on this research see: Trading and Liquidity In the Catastrophe Bond Market. Journal of Risk & Insurance, 2022. Journal of Risk & Insurance can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA. (Wiley-Blackwell - http://www.wiley.com/; Journal of Risk & Insurance - http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1539-6975)

Our news journalists report that additional information may be obtained by contacting Martin Hibbeln, University of Duisburg-Essen, Mercator Sch Management, Lotharstr 65, D-47057 Duisburg, Germany.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1111/jori.12407. 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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