Costs and Benefits of Financial Regulation: An Empirical Assessment for Insurance Companies

Abstract

We empirically analyze the costs and benefits of financial regulation based on a survey of 76 insurers from Austria, Germany and Switzerland. Our analysis includes both established and new empirical measures for regulatory costs and benefits. This is the first paper that takes costs and benefits combined into account using a latent class regression with covariates. Another feature of this paper is that it analyzes regulatory costs and benefits not only on an industry level, but also at the company level. This allows us to empirically test fundamental principles of financial regulation such as proportionality: the intensity of regulation should reflect the firm-specific amount and complexity of the risk taken. Our empirical findings do not support the proportionality principle; for example, regulatory costs cannot be explained by differences in business complexity. One potential policy implication is that the proportionality principle needs to be more carefully applied to financial regulation.

Respektowanie zasady proporcjonalności w opinii banków spółdzielczych na przykładzie rekomendacji KNF

“…Literatura dotycząca wykorzystania zasady proporcjonalności w ocenie skutków regulacji finansowych nie jest zbyt obszerna 3 ; dominują publikacje z dziedziny prawa 4 . Niemniej wzra- 1 Y. Gam, Basel III LCR: A Regulatory Shock on a Bank and Beyond, Olin Business School, Washington University in St. Louis, 2017; J. F. Izquierdo, S. Muñoz, A. Rubio, C. Ulloa, Impact of capital regulation on SMEs credit, BBVA Research, Working Paper 2017, 01; Szok regulacyjny a konkurencyjność i rozwój sektora bankowego, red.…”

“…Przełom w ocenie regulacji, ALTERUM, Warszawa 2014. 4 N. Emiliou, The Principle of Proportionality in European Law: A Comparative Study, Kluwer Law International, London 1996; E. Engle, The History of the General Principle of Proportionality: An Overview, "Dartmouth sta częstotliwość odwoływania się do tego zagadnienia w aspekcie ekonomicznym (w tym w odniesieniu do rynków finansowych) zarówno w publikacjach naukowych, jak i dokumentach regulatorów, firm konsultingowych i innych opracowaniach.…”

The New Insurance Distribution Regulation in the EU—A Critical Assessment from a Legal and Economic Perspective

“…4 Klein (2013); Tennyson (2010), pp. 1-4; Lorson et al (2012); Eling and Pankoke (2016); Schwarzbach and Weston (2016). 5 For instance, that applies to the proportionality principle, minimal or additional implementation and the remuneration rules (BIPAR (2017); Bureau Européen des Unions de Consommateurs (2016), pp.…”