This paper confirms that adopting explicit deposit insurance expanded risk-shifting incentives for Canadian Banks and Trust Companies. By transferring responsibility for monitoring non-systematic risk to the Canadian Deposit Insurance Corporation (CDIC), deposit insurance eliminated the...

Credit risk transfer (CRT) instruments offer important diversification benefits but may magnify shocks since they disperse risk, across both financial and non-financial sectors. Exposures to CRT instruments, such as credit derivatives, are difficult to track, given the lack of public data on...

If imitation is the highest form of flattery, the United States may feel very flattered by the fact that other nations have modeled many of their regulations governing financial services (securities, banking, and insurance) on U.S. regulations. In fact, the United States government and the...

This paper examines the stock price impact of terrorist attacks. Using an official list of terrorism-related incidents compiled by the Counterterrorism Office of the U.S. Department of State, we identify 75 attacks between 1995 and 2002 in which publicly traded firms are targets. An event-study...

This paper incorporates insurance contracts into an operational risk model based on idiosyncratic and common shocks. A key feature of the approach is the explicit modelling of residual risk inherent in insurance contracts, such as counterparty default, payment uncertainty and liquidity risk due...

Close to 50% of municipal bonds are pre-packaged with insurance at the time of issue. We offer a tax-based rationale for the emergence of third-party insurance of tax-exempt bonds. We argue that insurance adds value as it allows a third party to become, in a probabilistic sense, an issuer of...

Considerable resources have been expended over the years debating the business tax treatment of market-purchased insurance versus self insurance. Following a long tradition, the U.S. Internal Revenue Service treats only the latter as acceptable evidence of risk shifting and therefore worthy of...

Within the past thirty-five years approximately fifty nations have consolidated their financial regulatory agencies into either a single integrated agency or into two semi-integrated agencies. The United States has resisted this trend, due in part to a concern that the costs of such significant...

In this essay written in honor of the retirement of Eddy Wymeersch, Professor Howell Jackson explores the manner in which European nations have moved towards more consolidated systems of financial regulation and discusses the implications of the European experience for the United States. While...