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CAT Bonds: A Suitable Systemic Approach for Handling Catastrophic Risks in the Czech Republic?

Author

Listed:
  • Petra Tisová
  • Eva Ducháčková
  • Bohumil Stádník

Abstract

Catastrophic natural events in the Czech Republic have always caused a considerable burden on public finance. However, this risk can be transferred to capital market investors through CAT bonds, which have never been used for this purpose in the Czech Republic. The paper deals with the theoretical background of CAT bonds, resulting in a back test simulation of a hypothetical CAT bond issued for the period 1999-2003. As a result, by transferring the risk to the capital market, investors could save a significant part of the Czech Republic's public funds.

Suggested Citation

  • Petra Tisová & Eva Ducháčková & Bohumil Stádník, 2023. "CAT Bonds: A Suitable Systemic Approach for Handling Catastrophic Risks in the Czech Republic?," Prague Economic Papers, Prague University of Economics and Business, vol. 2023(6), pages 608-627.
    • Handle: RePEc:prg:jnlpep:v:2023:y:2023:i:6:id:844:p:608-627
    DOI: 10.18267/j.pep.844
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    More about this item

    Keywords

    CAT bonds; insurance; reinsurance; government's expenditures; catastrophic events;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid

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