IDEAS home Printed from https://ideas.repec.org/a/ris/jofitr/1676.html
   My bibliography  Save this article

The Unintended Consequences Of Macroprudential Regulation In Insurance And Banking: Endogenous Financial System Instability Induced By Regulatory Capital Standards

Author

Listed:

Abstract

Unlike microprudential regulation that focuses on the stability of individual institutions, macroprudential regulation focuses on the stability of the financial system as a whole. However, despite the increased interest in a system-wide lens, our empirical research indicates that the design of the Solvency II and Basel II/III frameworks, while intended to strengthen the stability of each sector individually, may be the source of endogenous destabilizing effects across the financial system, due to incentives for increased asset concentration and capital standard procyclicality. The support for the capital arbitraging hypothesis was weaker.

Suggested Citation

  • Thivaios, Periklis & Nuñez-Letamendia, Laura, 2021. "The Unintended Consequences Of Macroprudential Regulation In Insurance And Banking: Endogenous Financial System Instability Induced By Regulatory Capital Standards," Journal of Financial Transformation, Capco Institute, vol. 54, pages 200-213.
    • Handle: RePEc:ris:jofitr:1676
    as

    Download full text from publisher

    File URL: https://www.capco.com/Capco-Institute/Journal-54-Insurance/The-Unintended-Consequences-Of-Macroprudential-Regulation-In-Insurance
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Banks; Insurance; Regulation; Capital Regulatory; Macroeconomic Policy; Arbitrage; Cyclicality; Financial Asset Concentration; Basel; Solvency;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:1676. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Shahin Shojai (email available below). General contact details of provider: http://www.capco.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.