Featured Product

    BoE Working Paper on Capital Regulation and Product Market Outcomes

    March 02, 2018

    BoE published a working paper that examines the impact of the introduction of a risk-based capital regulation regime in 2002 on product market outcomes for the insurance industry in the United Kingdom. The main contribution of that paper is that it helps to accurately measure regulatory constraints using proprietary data on stress-test submissions of insurance firms from the BoE.

    Using proprietary data on stress-test submissions from the BoE, a measure of firm-level shocks to regulatory constraints is developed that is plausibly exogenous to shifts in insurance demand. The paper finds that constrained firms reduced underwriting relative to unconstrained firms, particularly for traditional insurance products that became more capital-intensive in the new regulatory regime. The reduction in underwriting was not as pronounced for linked products and products that are mainly investment vehicles such as mutual funds, implying a shift in the equilibrium product mix from traditional to linked. The paper also shows that a higher proportion of constrained firms restructured their balance sheets by transferring assets and liabilities and went through reorganizations—that is, a change in the legal owner of the firm.

     

    Related Link: Working Paper (PDF)

    Keywords: Europe, UK, Insurance, Banking, Securities, Capital Regulation, Product Market Outcomes, Stress Testing, BoE

    Featured Experts
    Related Articles
    News

    UK Regulators Announce Measures to Address Impact of COVID-19

    UK Regulatory Authorities published statements and guidance addressed to financial entities on dealing with the impact of the coronavirus (COVID-19) outbreak.

    March 26, 2020 WebPage Regulatory News
    News

    ISDA and Industry Request Delay in Timeline for Initial Margin Rules

    Considering the challenges posed by the COVID-19 pandemic, ISDA submitted a letter on behalf of 21 industry associations and their members requesting BCBS, IOSCO, and global regulators to suspend the current timeline for the initial margin phase-in.

    March 26, 2020 WebPage Regulatory News
    News

    FCA, FRC, and PRA Issue Joint Statement to Address Impact of COVID-19

    In response to the COVID-19 outbreak, FCA, the Financial Reporting Council (FRC), and PRA have announced a series of actions and made statements to support the continued functioning of capital markets in the UK.

    March 26, 2020 WebPage Regulatory News
    News

    EC Rule Corrects Regulation Supplementing Solvency II Directive

    EC published the EU Delegated Regulation 2020/442, which corrects the EU Delegated Regulation 2015/35 that supplements Solvency II Directive (2009/138/EC).

    March 26, 2020 WebPage Regulatory News
    News

    FED and FFIEC Offer Reporting Relief to Institutions Due to COVID-19

    FED and FFIEC announced regulatory reporting relief to financial institutions due to disruptions caused by the COVID-19.

    March 26, 2020 WebPage Regulatory News
    News

    EBA and ESMA Clarify Accounting Implications of COVID-19 Measures

    EBA and ESMA issued statements to address certain accounting implications of the economic support and relief measures adopted by EU member states in response to the COVID-19 crisis.

    March 25, 2020 WebPage Regulatory News
    News

    IOSCO and Securities Regulators Coordinate Responses to COVID-19

    IOSCO members are cooperating closely on their responses to the COVID-19-related disruption in capital markets.

    March 25, 2020 WebPage Regulatory News
    News

    US Agencies Issue Interim MMLF Rule, FED Updates FR Y-14 Forms

    In an effort to mitigate the impact of economic disruptions due to the COVID-19 outbreak, Money Market Mutual Fund Liquidity Facility (MMLF) was launched in the US to enhance the liquidity and functioning of money markets and to support the economy.

    March 25, 2020 WebPage Regulatory News
    News

    ESRB Updates List of Countercyclical Capital Buffers in March 2020

    ESRB updated the list of countercyclical capital buffer (CCyB) rates applicable in countries in the Eurosystem.

    March 24, 2020 WebPage Regulatory News
    News

    FHFA Amends Stress Testing Rule for Regulated Entities

    FHFA adopted a final rule that amends the stress testing rule, in line with section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    March 24, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4890