MAP20140025053Lin, Wen-ChangThe Relationship between regulatory pressure and insurer risk taking / Wen-Chang Lin, Yi-Hsun Lai, Michael R. PowersSumario: The article examines the risk-taking behavior of propertyliability insurers in the presence of risk-based capital regulation. An option pricing model is developed to evaluate the expected regulatory cost and predict a nonlinear relationship between regulatory pressure and insurers¿ risk taking. We then conduct an empirical test using the simultaneous threshold regression. The result shows that there is a threshold effect of regulatory pressure on insurer risk taking. Poorly capitalized insurers seem to be aware of their proximity to regulatory interventions but do not fully respond to the impending regulatory pressure. This implies either regulatory interventions are not costly enough or they are too late, or bothEn: The Journal of risk and insurance. - Nueva York : The American Risk and Insurance Association, 1964- = ISSN 0022-4367. - 02/06/2014 Volumen 81 Número 2 - junio 2014 I. Título.
