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A distinguished economist examines competition, regulation, and stability in today's global banks Does too much competition in banking hurt society? What policies can best protect and stabilize banking without stifling it? Institutional responses to such questions have evolved over time, from interventionist regulatory control after the Great Depression to the liberalization policies that started in the United States in the 1970s. The global financial crisis of 2007–2009, which originated from an oversupply of credit, once again raised questions about excessive banking competition and what should be done about it. Competition and Stability in Banking addresses the critical relationships between competition, regulation, and stability, and the implications of coordinating banking regulations with competition policies. Xavier Vives argues that while competition is not responsible for fragility in banking, there are trade-offs between competition and stability. Well-designed regulations would alleviate these trade-offs but not eliminate them, and the specificity of competition in banking should be accounted for. Vives argues that regulation and competition policy should be coordinated, with tighter prudential requirements in more competitive situations, but he also shows that supervisory and competition authorities should stand separate from each other, each pursuing its own objective. Vives reviews the theory and empirics of banking competition, drawing on up-to-date analysis that incorporates the characteristics of modern market-based banking, and he looks at regulation, competition policies, and crisis interventions in Europe and the United States, as well as in emerging economies. Focusing on why banking competition policies are necessary, Competition and Stability in Banking examines regulation's impact on the industry's efficiency and effectiveness.
The paper analyzes the relationship between bank competition and stability, with a specific focus on the Middle East and North Africa. Price competition has a positive effect on bank liquidity, as it induces self-discipline incentives on banks for the choice of bank funding sources and for the holding of liquid assets. On the other hand, price competition may have a potentially negative impact on bank solvency and on the credit quality of the loan portfolio. More competitive banks may be less solvent if the potential increase in the equity base—due to capital adjustments—is not large enough to compensate for the reduction in bank profitability. Also, banks subject to stronger competitive pressures may have a higher rate of nonperforming loans, if the increase in the risk-taking incentives from the lender’s side overcomes the decrease in the credit risk from the borrower’s side. In both cases, country-specific policies for market entry conditions—and for bank regulation and supervision—may significantly affect the sign and the size of the relationship. The paper suggests policy reforms designed to improve market contestability and to increase the quality and independence of prudential supervision.
Solvency II is the new regime that regulates the solvency requirements for EU insurers and reinsurers. Solvency II aims to reduce the risk that an insurer would be unable to meet claims, to provide early warning to supervisors so that they can intervene promptly if capital falls below the required level, and to promote confidence in the financial stability of the insurance sector. Solvency II not only sets out the minimum capital requirements to guarantee policyholder protection, but also includes measures to stimulate risk management and good governance and to improve transparency.0While the Solvency I regime only sets basic solvency standards, Solvency II has a much wider scope. Solvency II aims to unify the regulation of the European insurance market as well as to increase policyholder protection. Because it improves the protection of policyholders, creates an incentive e for good risk management, recognizes the economic reality of a group, establishes market transparency and provides for a modern risk based supervisory regime, the book’s subtitle is: Solvency II is Good for You.0This book provides a thorough and well-structured overview of the new regulatory regime and how it will affect insurers, re-insurers and other market participants, including policyholders. The author, who was closely involved in the making of Solvency II, offers all the necessary insights and explanations to better understand this new regulation. The book is written for a wide audience, from the non-expert who wants to gain some or more insight in the complex world of insurance and Solvency II, to the specialist who will find this book a very interesting and helpful reference work.0.
Insurance Planning Models: Price Competition and Regulation of Financial Stability is an exciting new book that takes readers inside the secrets of internal organization of the modern general insurance business. Many people know that it is subject to intensive state regulation, whereby the purpose is to maintain long-term efficiency, honesty, security and stability in the interest and for the protection of policyholders. However, except for knowing that the insurance system is regulated by intensive calculations, that the insurance companies have different positions on the market, that they pursue different goals and even compete with each other, and that one of the tools of this competition is the policy price, not so many people know how to achieve these deserving goals.In developing quantitative recommendations and directives to competing insurers, regulators rely on certain models. In the 1900s, such models were proposed. They were useful for an insight into the probabilistic nature of the insurance process, but not for direct application to practically meaningful problems of insurance regulation. This book is your guide to the rigorously constructed long-term dynamic models with the aim to improve regulatory methods and develop quantitative recommendations using both analytical calculations and computer simulation. It is addressed to a wide range of readers, including interested policyholders, economists whose interest lies in insurance management and regulation, and mathematicians wishing to expand the scope of application for their knowledge.This book is devoted to certain issues that are either not sufficiently presented, or even absent in the literature. It is an attempt to penetrate from the standpoint of mathematical modeling into the goals which face insurance regulators and contending company managers for preventing insolvencies, or even crises pertinent to badly regulated complex reflexive systems.It offers rigorous probabilistic models of long-term insurance business based on the laws of mass phenomena. They mitigate deficiencies of oversimplified risk models. The book presents advances in probabilistic techniques designed to seek quantitative, rather than qualitative, directives and recommendations regarding safe control aiming to achieve different business goals.
Examines the importance of place and its relationship to the quality of public life in the context of those northern states (e.g. Montana) whose settlement marked the end of the old frontier. Also generally questions, in terms of the Jeffersonian democratic ideal, the relationship between cities and rural areas and between politics and economics. Ten papers, revised from their presentation at an October 1989 meeting in Reading, England, explore the various economic policies of the British government since 1900, from nonintervention to nationalism to privatization and deregulation, and their effect on such industries as agriculture, oil, banking, and manufacturing. They find the policies ineffectual and inconsistent compared to those in other countries. Annotation copyrighted by Book News, Inc., Portland, OR

Insurance Industry

United States. Congress. Senate. Committee on the Judiciary. Subcommittee on Antitrust and Monopoly

Published: 1971

Total Pages: 1792


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