Could we rely on market discipline as a substitute for insurance regulation?
- Autores
- Castagnolo, Fernando; Ferro, Gustavo Adolfo
- Año de publicación
- 2013
- Idioma
- inglés
- Tipo de recurso
- artículo
- Estado
- versión publicada
- Descripción
- Purpose: The purpose of this paper is to examine empirically whether the market discipline works, and if so, whether it is a complement or substitute of prudential regulation in the insurance markets. Market discipline is intended as “the power of … market forces … to evaluate and control the risky behaviour of the financial institutions”. The authors' formal hypothesis is that if market discipline works as complementary to prudential regulation, the response of the insured is expected to be weaker than if market discipline acts as a substitute to prudential regulation. Design/methodology/approach: The authors designed an experiment examining policy subscription reaction to adjustments in insurers' risk ratings in three different regulatory environments, to compare market discipline in each market. An econometric model was estimated to test the reaction of policy subscription to changes in credit ratings of the insurers. Findings: The findings indicate that more market discipline was exerted in the crisis period, and more intensely where it is intended to replace regulation. A formal hypothesis was tested: in a less regulated environment, consumers' protection rests more heavily on their caution and use of market information about the insurers' financial condition. Research limitations/implications: The research is constrained by the availability and detail of the publicly available data. Practical implications: The results imply that regulation and market discipline work more as complements than as substitutes. Social implications: Market discipline does not replace prudential regulation in the insurance market. Originality/value: The approach presented in the paper adds to precedent work studying comparatively different regulatory environments, and also concerns the response of market discipline in the financial crisis context.
Fil: Castagnolo, Fernando. Citigroup; Reino Unido
Fil: Ferro, Gustavo Adolfo. Universidad Argentina de la Empresa. Facultad de Ciencias Económicas. Instituto de Economía; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina - Materia
-
Regulation
Microeconomic Intervention
Financial Crisis
Credit Ratings
Insurance
Market Discipline - Nivel de accesibilidad
- acceso abierto
- Condiciones de uso
- https://creativecommons.org/licenses/by-nc-sa/2.5/ar/
- Repositorio
- Institución
- Consejo Nacional de Investigaciones Científicas y Técnicas
- OAI Identificador
- oai:ri.conicet.gov.ar:11336/22945
Ver los metadatos del registro completo
id |
CONICETDig_8f15b6ce1fe160e22e7db102c54685d0 |
---|---|
oai_identifier_str |
oai:ri.conicet.gov.ar:11336/22945 |
network_acronym_str |
CONICETDig |
repository_id_str |
3498 |
network_name_str |
CONICET Digital (CONICET) |
spelling |
Could we rely on market discipline as a substitute for insurance regulation?Castagnolo, FernandoFerro, Gustavo AdolfoRegulationMicroeconomic InterventionFinancial CrisisCredit RatingsInsuranceMarket Disciplinehttps://purl.org/becyt/ford/5.2https://purl.org/becyt/ford/5Purpose: The purpose of this paper is to examine empirically whether the market discipline works, and if so, whether it is a complement or substitute of prudential regulation in the insurance markets. Market discipline is intended as “the power of … market forces … to evaluate and control the risky behaviour of the financial institutions”. The authors' formal hypothesis is that if market discipline works as complementary to prudential regulation, the response of the insured is expected to be weaker than if market discipline acts as a substitute to prudential regulation. Design/methodology/approach: The authors designed an experiment examining policy subscription reaction to adjustments in insurers' risk ratings in three different regulatory environments, to compare market discipline in each market. An econometric model was estimated to test the reaction of policy subscription to changes in credit ratings of the insurers. Findings: The findings indicate that more market discipline was exerted in the crisis period, and more intensely where it is intended to replace regulation. A formal hypothesis was tested: in a less regulated environment, consumers' protection rests more heavily on their caution and use of market information about the insurers' financial condition. Research limitations/implications: The research is constrained by the availability and detail of the publicly available data. Practical implications: The results imply that regulation and market discipline work more as complements than as substitutes. Social implications: Market discipline does not replace prudential regulation in the insurance market. Originality/value: The approach presented in the paper adds to precedent work studying comparatively different regulatory environments, and also concerns the response of market discipline in the financial crisis context.Fil: Castagnolo, Fernando. Citigroup; Reino UnidoFil: Ferro, Gustavo Adolfo. Universidad Argentina de la Empresa. Facultad de Ciencias Económicas. Instituto de Economía; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas; ArgentinaEmerald Group Publishing Limited2013-02info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttp://purl.org/coar/resource_type/c_6501info:ar-repo/semantics/articuloapplication/pdfapplication/pdfhttp://hdl.handle.net/11336/22945Castagnolo, Fernando; Ferro, Gustavo Adolfo; Could we rely on market discipline as a substitute for insurance regulation?; Emerald Group Publishing Limited; Journal of Financial Regulation and Compliance; 21; 1; 2-2013; 4-151358-1988CONICET DigitalCONICETenginfo:eu-repo/semantics/altIdentifier/url/http://www.emeraldinsight.com/doi/abs/10.1108/13581981311297795info:eu-repo/semantics/altIdentifier/doi/10.1108/13581981311297795info:eu-repo/semantics/openAccesshttps://creativecommons.org/licenses/by-nc-sa/2.5/ar/reponame:CONICET Digital (CONICET)instname:Consejo Nacional de Investigaciones Científicas y Técnicas2025-09-03T09:55:50Zoai:ri.conicet.gov.ar:11336/22945instacron:CONICETInstitucionalhttp://ri.conicet.gov.ar/Organismo científico-tecnológicoNo correspondehttp://ri.conicet.gov.ar/oai/requestdasensio@conicet.gov.ar; lcarlino@conicet.gov.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:34982025-09-03 09:55:50.545CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicasfalse |
dc.title.none.fl_str_mv |
Could we rely on market discipline as a substitute for insurance regulation? |
title |
Could we rely on market discipline as a substitute for insurance regulation? |
spellingShingle |
Could we rely on market discipline as a substitute for insurance regulation? Castagnolo, Fernando Regulation Microeconomic Intervention Financial Crisis Credit Ratings Insurance Market Discipline |
title_short |
Could we rely on market discipline as a substitute for insurance regulation? |
title_full |
Could we rely on market discipline as a substitute for insurance regulation? |
title_fullStr |
Could we rely on market discipline as a substitute for insurance regulation? |
title_full_unstemmed |
Could we rely on market discipline as a substitute for insurance regulation? |
title_sort |
Could we rely on market discipline as a substitute for insurance regulation? |
dc.creator.none.fl_str_mv |
Castagnolo, Fernando Ferro, Gustavo Adolfo |
author |
Castagnolo, Fernando |
author_facet |
Castagnolo, Fernando Ferro, Gustavo Adolfo |
author_role |
author |
author2 |
Ferro, Gustavo Adolfo |
author2_role |
author |
dc.subject.none.fl_str_mv |
Regulation Microeconomic Intervention Financial Crisis Credit Ratings Insurance Market Discipline |
topic |
Regulation Microeconomic Intervention Financial Crisis Credit Ratings Insurance Market Discipline |
purl_subject.fl_str_mv |
https://purl.org/becyt/ford/5.2 https://purl.org/becyt/ford/5 |
dc.description.none.fl_txt_mv |
Purpose: The purpose of this paper is to examine empirically whether the market discipline works, and if so, whether it is a complement or substitute of prudential regulation in the insurance markets. Market discipline is intended as “the power of … market forces … to evaluate and control the risky behaviour of the financial institutions”. The authors' formal hypothesis is that if market discipline works as complementary to prudential regulation, the response of the insured is expected to be weaker than if market discipline acts as a substitute to prudential regulation. Design/methodology/approach: The authors designed an experiment examining policy subscription reaction to adjustments in insurers' risk ratings in three different regulatory environments, to compare market discipline in each market. An econometric model was estimated to test the reaction of policy subscription to changes in credit ratings of the insurers. Findings: The findings indicate that more market discipline was exerted in the crisis period, and more intensely where it is intended to replace regulation. A formal hypothesis was tested: in a less regulated environment, consumers' protection rests more heavily on their caution and use of market information about the insurers' financial condition. Research limitations/implications: The research is constrained by the availability and detail of the publicly available data. Practical implications: The results imply that regulation and market discipline work more as complements than as substitutes. Social implications: Market discipline does not replace prudential regulation in the insurance market. Originality/value: The approach presented in the paper adds to precedent work studying comparatively different regulatory environments, and also concerns the response of market discipline in the financial crisis context. Fil: Castagnolo, Fernando. Citigroup; Reino Unido Fil: Ferro, Gustavo Adolfo. Universidad Argentina de la Empresa. Facultad de Ciencias Económicas. Instituto de Economía; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina |
description |
Purpose: The purpose of this paper is to examine empirically whether the market discipline works, and if so, whether it is a complement or substitute of prudential regulation in the insurance markets. Market discipline is intended as “the power of … market forces … to evaluate and control the risky behaviour of the financial institutions”. The authors' formal hypothesis is that if market discipline works as complementary to prudential regulation, the response of the insured is expected to be weaker than if market discipline acts as a substitute to prudential regulation. Design/methodology/approach: The authors designed an experiment examining policy subscription reaction to adjustments in insurers' risk ratings in three different regulatory environments, to compare market discipline in each market. An econometric model was estimated to test the reaction of policy subscription to changes in credit ratings of the insurers. Findings: The findings indicate that more market discipline was exerted in the crisis period, and more intensely where it is intended to replace regulation. A formal hypothesis was tested: in a less regulated environment, consumers' protection rests more heavily on their caution and use of market information about the insurers' financial condition. Research limitations/implications: The research is constrained by the availability and detail of the publicly available data. Practical implications: The results imply that regulation and market discipline work more as complements than as substitutes. Social implications: Market discipline does not replace prudential regulation in the insurance market. Originality/value: The approach presented in the paper adds to precedent work studying comparatively different regulatory environments, and also concerns the response of market discipline in the financial crisis context. |
publishDate |
2013 |
dc.date.none.fl_str_mv |
2013-02 |
dc.type.none.fl_str_mv |
info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion http://purl.org/coar/resource_type/c_6501 info:ar-repo/semantics/articulo |
format |
article |
status_str |
publishedVersion |
dc.identifier.none.fl_str_mv |
http://hdl.handle.net/11336/22945 Castagnolo, Fernando; Ferro, Gustavo Adolfo; Could we rely on market discipline as a substitute for insurance regulation?; Emerald Group Publishing Limited; Journal of Financial Regulation and Compliance; 21; 1; 2-2013; 4-15 1358-1988 CONICET Digital CONICET |
url |
http://hdl.handle.net/11336/22945 |
identifier_str_mv |
Castagnolo, Fernando; Ferro, Gustavo Adolfo; Could we rely on market discipline as a substitute for insurance regulation?; Emerald Group Publishing Limited; Journal of Financial Regulation and Compliance; 21; 1; 2-2013; 4-15 1358-1988 CONICET Digital CONICET |
dc.language.none.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
info:eu-repo/semantics/altIdentifier/url/http://www.emeraldinsight.com/doi/abs/10.1108/13581981311297795 info:eu-repo/semantics/altIdentifier/doi/10.1108/13581981311297795 |
dc.rights.none.fl_str_mv |
info:eu-repo/semantics/openAccess https://creativecommons.org/licenses/by-nc-sa/2.5/ar/ |
eu_rights_str_mv |
openAccess |
rights_invalid_str_mv |
https://creativecommons.org/licenses/by-nc-sa/2.5/ar/ |
dc.format.none.fl_str_mv |
application/pdf application/pdf |
dc.publisher.none.fl_str_mv |
Emerald Group Publishing Limited |
publisher.none.fl_str_mv |
Emerald Group Publishing Limited |
dc.source.none.fl_str_mv |
reponame:CONICET Digital (CONICET) instname:Consejo Nacional de Investigaciones Científicas y Técnicas |
reponame_str |
CONICET Digital (CONICET) |
collection |
CONICET Digital (CONICET) |
instname_str |
Consejo Nacional de Investigaciones Científicas y Técnicas |
repository.name.fl_str_mv |
CONICET Digital (CONICET) - Consejo Nacional de Investigaciones Científicas y Técnicas |
repository.mail.fl_str_mv |
dasensio@conicet.gov.ar; lcarlino@conicet.gov.ar |
_version_ |
1842269369487327232 |
score |
13.13397 |