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on Insurance Economics |
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Issue of 2014‒07‒13
thirty papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | International Monetary Fund. Western Hemisphere Dept. |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Financial system stability assessment;Banking sector;Insurance;Stress testing;Bank supervision;Insurance supervision;Securities regulations;Housing;Financial safety nets;Canada;mortgage insurance, credit risk, market risk, life insurance, life insurers, risk assessment, securities markets, insurance companies, deposit insurance, mortgage insurers, regulatory agencies, capital requirements, policyholders, risk-weighted assets, supervisory framework, life insurance companies, underwriting, casualty insurance, risk management, insurance system, insurance industry, risk premium, supervisory authorities, portfolio insurance, financial systems, motor insurance, supervisory agencies, regulatory approaches, emerging markets, international supervisory standards, health insurance, internal controls, government insurance, contingency planning, consumer protection, risk transfer, risk sharing, level playing field, risk assessments, insurance regulation, pension funds, insurance agents, underwriting standards, insurance products |
| Date: | 2014–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/29&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Financial Sector Assessment Program;Insurance supervision;Insurance regulations;Austria;life insurance, insurance industry, insurance companies, risk management, life insurers, insurance products, insurance supervisors, reinsurance, loss ratio, life insurance companies, risk assessment, health insurance, supervisory system, pension funds, insurance agents, non-life insurance, insurance obligations, risk assessments, credit risks, reinsurance contracts, supervisory regime, policyholders, risk profile, consumer protection, actuarial reports, economic risks, financial reporting, catastrophes |
| Date: | 2014–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/14&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Keywords: | Financial Sector Assessment Program;Insurance;Market interest rates;Insurance regulations;Insurance supervision;Canada; |
| Date: | 2014–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/68&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Keywords: | Financial Sector Assessment Program;Insurance regulations;Insurance supervision;Reports on the Observance of Standards and Codes;Canada; |
| Date: | 2014–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/72&r=all |
| By: | Bratsberg, Bernt (Ragnar Frisch Centre for Economic Research); Raaum, Oddbjørn (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research) |
| Abstract: | Using longitudinal data from the date of arrival, we study long‐term labor market and social insurance outcomes for all major immigrant cohorts to Norway since 1970. Immigrants from high-income countries performed as natives, while labor migrants from low‐income source countries had declining employment rates and increasing disability program participation over the lifecycle. Refugees and family migrants assimilated during the initial period upon arrival, but labor market convergence halted after a decade and was accompanied by rising social insurance rates. For the children of labor migrants of the 1970s, we uncover evidence of intergenerational assimilation in education, earnings and fertility. |
| Keywords: | migration, assimilation, social insurance |
| JEL: | F22 H55 J22 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8292&r=all |
| By: | International Monetary Fund. European Dept. |
| Keywords: | Banking sector;Liquidity;Stress testing;Bank supervision;Basel Core Principles;Bank resolution;Deposit insurance;Financial safety nets;Financial Sector Assessment Program;Financial system stability assessment;Reports on the Observance of Standards and Codes;Albania; |
| Date: | 2014–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/79&r=all |
| By: | Onour, Ibrahim |
| Abstract: | The primary aim of this paper to evaluate the cost of deposit insurance premium and assess moral hazard effect in the banking sector in Sudan. The analysis of moral hazard in this paper is based on two types of risks, credit default risk, measured as the ratio of non-performing loans to the total size of loans for each bank, and operational risk measured as technical inefficiency. The findings of the research indicate there is a positive association between insurance coverage premium and increase in each of these two risks, implying evidence of moral hazard effect. A policy implication of this result is that the moral hazard behavior in the banking sector can be mitigated by changing the current policy of flat rate deposit insurance premium to risk based insurance premium policy. |
| Keywords: | Deposit; Insurance; Moral hazard; Risk. |
| JEL: | G12 G2 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57082&r=all |
| By: | Adlane HAFFAR; Lubica HIKKEROVA |
| Abstract: | This article deals with the issue of natural disaster risk coverage. We introduce a solution to cover this natural disaster risk through securitizations, first, by subscribing « options on total loss experience ratio» that are derivative products, the |
| Keywords: | Total loss ratio, risk transfer, alternative risk, insurance, securitization, natural disaster option, reinsurance. |
| Date: | 2014–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-384&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Keywords: | Financial sector;Banks;Stress testing;Bank supervision;Bank resolution;Insurance;Capital markets;Securities markets;Macroprudential Policy;Financial system stability assessment;Korea, Republic of; |
| Date: | 2014–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/126&r=all |
| By: | International Monetary Fund. Western Hemisphere Dept. |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Financial Sector Assessment Program;Basel Core Principles;Bank supervision;Insurance;Securities regulations;Securities markets;Reports on the Observance of Standards and Codes;Canada;risk management, banking supervision, supervisory approach, supervisory framework, legal entity, insurance business, iosco principles, prudential supervision, risk profile, supervisory practice, insurance intermediaries, accounting standards, internal audit, regulatory requirements, money laundering, information exchange, ethical standards, internal controls, international standards, adequate powers, reporting requirements, due diligence requirements, foreign authorities, beneficial ownership, prudential risks, supervisory agencies, terrorist financing, exchange information, ensuring compliance, supervisory standards, assessment criteria, financial intermediaries, licensing process, insurance supervisors, regulatory authorities, market integrity, confidentiality requirements, assessment mission, legal entities, technical capacity, due regard, life insurance, supervisory authorities, collective investment schemes, assessment process, compliance officer, supervisory process |
| Date: | 2014–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/30&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Keywords: | Financial Sector Assessment Program;Financial safety nets;Banking sector;Bank resolution;Deposit insurance;Bank supervision;Crisis prevention;Canada; |
| Date: | 2014–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/67&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Keywords: | Financial system stability assessment;Banking sector;Basel Core Principles;Bank supervision;Securities markets;Securities regulations;Insurance supervision;Reports on the Observance of Standards and Codes;Switzerland; |
| Date: | 2014–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/144&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Keywords: | Banks;Bank supervision;Basel Core Principles;Capital markets;Securities markets;Insurance;Reports on the Observance of Standards and Codes;Financial system stability assessment;Korea, Republic of; |
| Date: | 2014–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/127&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Financial Sector Assessment Program;Financial stability;Macroprudential Policy;Deposit insurance;Bank resolution;Bank supervision;Liquidity management;Financial safety nets;Crisis prevention;Risk management;Austria;banking, problem bank, insured deposit, deposit guarantee, banking system, bank failure, bankers, bank failures, deposit insurance scheme, recapitalization, banking supervision, bank supervisor, deposit insurance coverage, banking sector, banking industry, capital adequacy, national bank, regulatory forbearance, subordinated debt, debt restructuring, bank vulnerability, bank insolvency regime, banking union, bankers associations, bank loss, liquidity ratio, bankruptcies, bank depositors, systemic banking crisis, bank holding, bank liquidity, enforcement power, bank bailouts, holding company, bank liquidations, banking services, bank liabilities, banking concentration |
| Date: | 2014–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/15&r=all |
| By: | Georges Dionne; Casey G. Rothschild |
| Abstract: | Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, to compute the corresponding premiums, and thereby to reduce asymmetric information. Permitting risk classification may reduce informational asymmetry-induced adverse selection and improve insurance market efficiency. It may also have undesirable equity consequences and undermine the implicit insurance against reclassification risk which legislated restrictions on risk classification could provide. We use a canonical insurance market screening model to survey and to extend the risk classification literature. We provide a unified framework for analyzing the economic consequences of legalized vs. banned risk classification, both in static-information environments and in environments in which additional information can be learned, by either side of the market, through potentially costly tests. |
| Keywords: | Adverse selection, Classification risk, Classification bans, Equity, Efficiency |
| JEL: | D82 I13 I14 I18 I38 G22 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1420&r=all |
| By: | Brodmann, Stefanie; Jillson, Irene; Hassan, Nahla |
| Abstract: | The new social insurance law introduced by the Jordanian government in 2010 was created in part to improve the likelihood of women’s employment through non- and gender specific changes. This study, which comprised individual interviews and focus groups with Jordanian women and men, employers and opinion leaders, was designed to elicit an understanding of their awareness and knowledge of the new law, designed to increase women’s employment - primarily the maternity insurance provision. Those affected by the law remained largely uninformed. Many employers communicated that they did not perceive it as cost neutral for their firms. Participants who were aware of the law, viewed the changes positively and believed with the right circumstances, the law could increase female employment. |
| Keywords: | Gender and Law,Labor Policies,Labor Markets,Gender and Development,Insurance Law |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:89187&r=all |
| By: | International Monetary Fund. European Dept. |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Social policy;Social safety nets;Fiscal policy;Economic growth;Gross domestic product;Poverty reduction;Population;Employment;Wages;Unemployment;Selected issues;Bulgaria;social protection, social assistance, social transfers, social protection spending, social assistance programs, social assistance spending, social insurance, social protection system, aging, unemployment benefits, disability, family allowances, disabled, social protection expenditures, social insurance programs, living conditions, old age, disabled persons, unemployment rate, dependency, social benefits, social security, aging population, unemployment rates, eligibility criteria, disability pensions, welfare dependency, older people, household welfare, ageing, maternity benefits, social assistance system, targeted social assistance, disabled children |
| Date: | 2014–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/24&r=all |
| By: | Chialin Chang (National Chung Hsing University, Taiwan); Wei-Chen Chen (National Chung Hsing University, Taiwan); and Michael McAleer (National Tsing Hua University, China; Erasmus University Rotterdam, the Netherlands; Complutense University of Madrid, Spain) |
| Abstract: | This paper examines the determinants of very low birth weight infant (or neonatal) mortality using the Taiwan National Health Insurance Research database from 1997 to 2009. After infants are discharged from hospital, it is not possible to track their mortality, so the Cox proportional hazard model is used to analyze the very low birth weight infant mortality rate. In order to clarify treatment responsibility and to avoid selective referral effects, we use the number of infants treated in the preceding five years to observe the effect of a physician’s and hospital’s medical experience on the mortality rate of hospitalized minimal birth weight infants. The empirical results show that, given disease control variables, a higher infant weight, higher quality hospitals, increased hospital medical experience, and higher investment in pediatrics can reduce the mortality rate significantly. However, an increased physician’s medical experience does not seem to influence significantly the very low birth weight infant mortality rate. |
| Keywords: | Very low birth weight, Neonatal mortality, Physician’s infant experience, Hospital infant experience, Statistical analysis, Cox proportional hazard model, Selective referral, Taiwan National Health Insurance Scheme |
| JEL: | C41 I10 I13 I18 |
| Date: | 2014–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140068&r=all |
| By: | Bratsberg, Bernt (Ragnar Frisch Centre for Economic Research); Raaum, Oddbjørn (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research) |
| Abstract: | Based on individual longitudinal data, we examine the evolution of employment and earnings of post‐EU accession Eastern European labour immigrants to Norway for a period of up to eight years after entry. We find that the migrants were particularly vulnerable to the negative labour demand shock generated by the financial crisis. During the winter months of 2008/09, the fraction of immigrant men claiming unemployment insurance benefits rose from below 2 to 14 per cent. Some of this increase turned out to be persistent, and unemployment remained considerably higher among immigrants than natives even three years after the crisis. Although we find that negative labour demand shocks raise the probability of return migration, the majority of the labour migrants directly affected by the downturn stayed in Norway and claimed unemployment insurance benefits. |
| Keywords: | migration, assimilation, social insurance |
| JEL: | F22 H55 J22 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8291&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Financial Sector Assessment Program;Bank resolution;Bank legislation;Deposit insurance;Liquidity management;Bank supervision;Financial safety nets;Risk management;Reports on the Observance of Standards and Codes;El Salvador; |
| Date: | 2014–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/46&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Abstract: | In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country. |
| Keywords: | Financial Sector Assessment Program;Basel Core Principles;Banking sector;Bank supervision;Deposit insurance;Reports on the Observance of Standards and Codes;El Salvador; |
| Date: | 2014–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/45&r=all |
| By: | Cerutti, Paula; Fruttero, Anna; Grosh, Margaret; Kostenbaum, Silvana; Oliveri, Maria Laura; Rodriguez-Alas, Claudia; Strokova, Victoria |
| Abstract: | How much do countries spend on social protection? Do social protection programs cover all poor people? And, how well are they targeted? It is notoriously hard to find comprehensive cross-country data on social protection programs which can help answer such questions and allow to benchmark social protection systems. The World Bank’s Latin American and Caribbean (LAC) Social Protection Database attempts to fill these knowledge gaps by collecting and systematizing data on social protection programs from both administrative sources and household surveys. The data assembled provides a powerful tool to study trends and analyze program performance as well as benchmark countries’ social protection systems. We found both expected and unexpected trends in spending on social protection and coverage of social protection programs across countries. Between 2000 and 2010 expenditureon social assistance nearly tripled. At a program level, conditional cash transfer programs ceased to dominate social assistance spending, with the exception of Mexico, and have come second to social pension spending in Brazil, Uruguay and Chile. Labor market programs remain small and fragmented, but show much more counter-cyclical patterns. |
| Keywords: | Poverty Impact Evaluation,Labor Markets,Insurance Law,Insurance&Risk Mitigation,Rural Poverty Reduction |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hdnspu:88769&r=all |
| By: | International Monetary Fund. Asia and Pacific Dept |
| Abstract: | KEY ISSUES Outlook and risks. The macroeconomic outlook is favorable. Growth has firmed, inflation has eased, and unemployment has remained low—trends that are expected to continue. The main risks relate to the impact of the Fed’s tapering, the outlook for the Mainland, and a possible correction in property prices. Financial. The Financial Sector Assessment Program (FSAP) conducted in 2013?14 concluded that the financial system is well regulated and supervised and the banking system is resilient to shocks. The main areas for improvement are the financial sector resolution regime and insurance sector regulation and supervision. The large and growing exposure to the Mainland warrants continued close monitoring. Property. After a prolonged rise, property prices have stabilized. Counter-cyclical prudential and fiscal measures deployed during the upswing provide buffers that can be used to faciliate an orderly adjustment in the market while safeguarding financial stability. A long-run solution to housing hinges on ensuring adequate supply. Fiscal policy. Hong Kong SAR has a track record of fiscal discipline. Casting fiscal policy in a long-term framework will help strike a balance between spending to address aging and inequality, preserving low taxes, and maintaining fiscal prudence. External assessment. Hong Kong SAR’s external position is consistent with medium-term fundamentals and desirable policies. The Linked Exchange Rate System remains the best arrangement for Hong Kong SAR. |
| Keywords: | Article IV consultation reports;Financial sector;Bank resolution;Bank supervision;Stress testing;Insurance supervision;Fiscal policy;Housing;Economic integration;Economic indicators;Staff Reports;Press releases;Hong Kong SAR; |
| Date: | 2014–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/132&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Abstract: | Hong Kong Special Administrative Region (HKSAR) has a very high level of compliance with the Basel Core Principles (BCPs) for Effective Banking Supervision. The Hong Kong Monetary Authority (HKMA) complements its high supervisory standards with a sustained commitment to the international regulatory reform agenda where it is an early adopter of many standards. HKMA supervises a major international financial center which was affected, though not significantly so, by the financial crisis. The banking system is characterized by the dominant presence of institutions with foreign ownership, including the systemic banks, which puts a premium on the HKMA’s role as a host supervisory authority. The HKMA is an authoritative supervisor, operating with de facto independence and conducting a close and continuous supervisory approach which places strong weight on clear communication with the industry and the expectation of high standards of corporate governance. Despite safeguards, however, the independence of the HKMA is not as fully protected by law as it could be. Some regulatory tightening is warranted to ensure the HKMA has a full suite of supervisory powers and is using the most appropriate regulatory definitions. |
| Keywords: | Financial system stability assessment;Basel Core Principles;Bank supervision;Insurance;Securities markets;Securities regulations;Reports on the Observance of Standards and Codes;Hong Kong SAR; |
| Date: | 2014–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/131&r=all |
| By: | Dobronogov, Anton; Gelb, Alan; Saldanha, Fernando Brant |
| Abstract: | Natural resources are being discovered in more countries, both rich and poor. Many of the new and aspiring resource exporters are low-income countries that are still receiving substantial levels of foreign aid. Resource discoveries open up enormous opportunities, but also expose producing countries to huge trade and fiscal shocks from volatile commodity markets if their exports are highly concentrated. A large literature on the"resource curse"shows that these are damaging unless countries manage to cushion the effects through countercyclical policy. It also shows that the countries least likely to do so successfully are those with weaker institutions, and these are most likely to remain as clients of the aid system. This paper considers the question of how donors should respond to their clients'potential windfalls. It discusses several ways in which the focus and nature of foreign aid programs will need to change, including the level of financial assistance. The paper develops some ideas on how a donor like the International Development Association might structure its program of financial transfers to mitigate volatility. The paper outlines ways in which the International Development Association could use hedging instruments to vary disbursements while still working within a framework of country allocations that are not contingent on oil prices. Simulations suggest that the International Development Association could be structured to provide a larger degree of insurance if it is calibrated to hedge against large declines in resource prices. These suggestions are intended to complement other mechanisms, including self-insurance using Sovereign Wealth Funds (where possible) and the facilities of the International Monetary Fund. |
| Keywords: | Debt Markets,Markets and Market Access,Emerging Markets,Climate Change Economics,Economic Theory&Research |
| Date: | 2014–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6952&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Abstract: | EXECUTIVE SUMMARY Switzerland’s financial sector is one of the largest in the world, especially relative to GDP. It is home to two of the largest banks, which are designated as globally systemically important financial institutions (G-SIFIs), and one of the largest reinsurance companies. The two global banks, account for 43 percent of Swiss banking sector deposits and 18 percent of capital; in addition, there are 24 cantonal banks, one of which has been designated a domestically systemically important financial institution (D-SIFI), as well as the newly licensed Postfinance, a cooperative Raiffeisenbank, and small private and regional banks. The two global banks––particularly UBS––were hard hit by the recent global financial crisis (GFC); the rest of the banking sector emerged relatively unscathed. In response to the GFC the Swiss authorities took forceful action. The single supervisor, the Swiss Financial Market Supervisory Authority (FINMA), became operational in 2009. Capital standards were raised above Basel minima and ahead of the Basel implementation timetable. Additional capital buffers were imposed on the two large banks, and contingent capital instruments (CoCos) introduced. Macroprudential instruments were analyzed, and at end-September 2013 a countercyclical capital buffer (CCB) targeting residential property mortgages took effect; an increase in the CCB was announced in January 2014, to take effect from June 2014. The insurance industry became subject to the Swiss Solvency Test (SST). Stress tests indicate that the banks are robust against even severe shocks. Banks have increased their capital, and the two global banks have achieved substantial deleveraging. FINMA has focused on significantly improving the quality of its supervision. That said, identification of individual bank risk was hindered as legal constraints prevented the Swiss authorities from providing regulatory data at the individual bank level. Hence the stress tests will not have served to indentify outliers in performance. Nonetheless, there remain important vulnerabilities and challenges to financial stability: • The Swiss economy is among the most interconnected in the world and is deeply exposed to volatility in the European Union (EU). Stresses in the euro area periphery led to “safe haven†flows to the Swiss franc, putting sustained upward pressure on the rate, which the authorities seek to counter through maintaining an exchange rate floor. • Real estate bubbles appear to be emerging; with monetary instruments not available, macroprudential instruments are being introduced, but so far are limited and untested. • While important progress has been made in addressing too-big-to-fail (TBTF) and too-big-to- save (TBTS) issues, this is still a work in progress. • Interest rates are negative at some maturities, threatening the business models of life insurance and pension companies. Temporary alleviation from the SST is in effect through 2015. |
| Keywords: | Financial system stability assessment;Financial sector;Banks;Stress testing;Bank supervision;Bank resolution;Insurance;Securities regulations;Financial risk;Risk management;Switzerland; |
| Date: | 2014–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/143&r=all |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Abstract: | EXECUTIVE SUMMARY Barbados has a relatively well-developed financial system, including a large offshore sector.1 The onshore system is dominated by large, regionally active banks. Banking services to the population are also provided by the credit union sector. The system also includes a mature but concentrated insurance sector with extensive international affiliates, and other non-bank financial institutions provide credit and other instruments for savers. The offshore sector is financially segregated from the domestic economy and is dominated by international banks mainly conducting treasury and wealth management operations. The financial system has increasingly been funding the government and residential mortgages, reflecting fiscal pressures and the limits imposed by capital controls on investments abroad. Systemic risks With a deteriorating fiscal situation and weak growth prospects, Barbados faces considerable macroeconomic vulnerabilities. Sovereign risk is a concern, given a large public debt, high fiscal deficits, and slow growth, and policy options are limited by a fixed exchange rate regime. While long-standing capital controls provide some protection against disorderly scenarios, they are likely to become less effective over time unless fiscal vulnerabilities are addressed. The authorities are committed to the announced fiscal consolidation plan, but full efforts should be deployed to secure timely and successful implementation. While the financial system does not appear to be a source of immediate risk, its position appears to be deteriorating, with implications for systemic stability. Credit quality of domestic banks and credit unions has weakened considerably since the global crisis and, with growth expected to remain slow in the years ahead, is projected to deteriorate further. Weaker bank balance sheets could dampen credit supply, amplify the economic decline, and exacerbate broader macroeconomic vulnerabilities. Moreover, stress-tests illustrate that the financial system would be vulnerable in the face of severe shocks. Relatively large capital and liquidity buffers mean that onshore banks can generally withstand moderate shocks without breaching regulatory requirements. However, vulnerabilities emerge in the case of severe shocks, particularly in a branch of a strong foreign bank and in the credit union sector. The latter is also vulnerable to medium-sized liquidity shocks. The offshore financial sector does not appear to be a major source of risk given that it is prevented from carrying out financial transactions with domestic residents, but common ownership links and reputational risks should be monitored closely. |
| Keywords: | Financial system stability assessment;Financial sector;Banks;Bank supervision;Basel Core Principles;Insurance supervision;Reports on the Observance of Standards and Codes;Barbados; |
| Date: | 2014–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/53&r=all |
| By: | Dahl, Gordon B. (University of California, San Diego); Kostol, Andreas Ravndal (University of Bergen); Mogstad, Magne (University of Chicago) |
| Abstract: | Strong intergenerational correlations in various types of welfare use have fueled a long-standing debate over whether welfare receipt in one generation causes welfare participation in the next generation. Some claim a causal relationship in welfare receipt across generations has created a culture in which welfare use reinforces itself through the family. Others argue the determinants of poverty or poor health are correlated across generations, so that children's welfare participation is associated with, but not caused by, parental welfare receipt. However, there is little empirical evidence to sort out these claims. In this paper, we investigate the existence and importance of family welfare cultures in the context of Norway's disability insurance (DI) system. To overcome the challenge of correlated unobservables across generations, we take advantage of random assignment of judges to DI applicants whose cases are initially denied. Some appeal judges are systematically more lenient, which leads to random variation in the probability a parent will be allowed DI. Using this exogenous variation, we find strong evidence that welfare receipt in one generation causes welfare participation in the next generation: when a parent is allowed DI, their adult child's participation over the next five years increases by 6 percentage points. This effect grows over time, rising to 12 percentage points after ten years. While these findings are specific to our setting, they serve to highlight that welfare reforms can have long-lasting effects on program participation, since any original effect on the current generation could be reinforced by changing the participation behavior of their children as well. The detailed nature of our data allows us to compare the intergenerational transmission with spillover effects in other networks and to explore mechanisms. Our findings point to a special link between parents and their children, with little impact due to close neighbors' DI participation. We find suggestive evidence that what may change as a result of a parent being allowed DI is their children's beliefs about the efficacy of trying to get on to the DI program or their attitudes about DI participation and its stigma. |
| Keywords: | intergenerational welfare transmission, welfare cultures, disability insurance |
| JEL: | I38 J62 H53 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8265&r=all |
| By: | Ivo Krznar; James Morsink |
| Abstract: | The goal of this paper is to assess the effectiveness of the policy measures taken by Canadian authorities to address the housing boom. We find that the the last three rounds of macroprudential policies implemented since 2010 were associated with lower mortgage credit growth and house price growth. The international experience suggests that—in addition to tighter loan-to-value limits and shorter amortization periods—lower caps on the debt-to-income ratio and higher risk weights could be effective if the housing boom were to reignite. Over the medium term, the authorities could consider structural measures to further improve the soundness of housing finance. |
| Keywords: | Macroprudential Policy;Canada;Housing;Credit expansion;Housing prices;housing market, mortgage insurance, macroprudential regulation |
| Date: | 2014–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/83&r=all |