Effects of Cap-and-Trade Mechanism and Financial Gray Rhino Threats on Insurer Performance
學年 110
學期 2
出版(發表)日期 2022-07-29
作品名稱 Effects of Cap-and-Trade Mechanism and Financial Gray Rhino Threats on Insurer Performance
作品名稱(其他語言)
著者 Shi Chen; Fu-Wei Huang; Jyh-Horng Lin
單位
出版者
著錄名稱、卷期、頁數 Energies 15(15), 5506
摘要 This paper develops a capped barrier option model to examine how a cap-and-trade mechanism affects an insurer’s guaranteed rate-setting behavior and policyholder protection in a financial gray rhino environment. Toward sustainability, the insurer explicitly captures the credit risk from the borrowing firms, participating in the cap-and-trade scheme to reduce carbon emissions, an essential issue of carbon emission and environmental protection when facing gray rhino threats. In addition, the energy economics and policy analysis are from the fund-providing insurer’s perspective. Green lending policies and life insurance policy loans (i.e., disintermediation related to insurance stability) are crucial to managers and regulators, particularly bridging the borrowing-firm carbon transactions for carbon emission reductions toward sustainability. We show that the shrinking regulatory cap of the cap-and-trade scheme harms policyholder protection, adversely affecting insurance stability. The harm becomes more serious when the gray rhino threat on borrowing firms becomes significant. An increase in policy loans decreases the insurer’s interest margin and policyholder protection. However, increasing the gray rhino threat decreases life insurance policies at a reduced guaranteed rate but increases policyholder protection, contributing to insurance stability. Therefore, the government can use the cap-and-trade scheme to control carbon emissions and improve the environment, but it harms policyholder protection. We suggest that, for example, the government should subsidize the insurer for green lending, affecting insurance stability.
關鍵字 cap-and-trade; capped barrier option model; financial gray rhino; policyholder protection; policy loans
語言 en
ISSN 1996-1073
期刊性質 國外
收錄於 SCI Scopus
產學合作
通訊作者 Jyh-Horng Lin
審稿制度
國別 CHE
公開徵稿
出版型式 ,電子版