This paper explores the relation between capital and risk in the life insurance industry in the period after the adoption of life risk-based capital (RBC) regulation. To examine this issue, we use a simultaneous-equation partial-adjustment model. Three equations express the interrelations among...

There is serious debate about the effectiveness of the market to discipline regulated industries like banks and insurance. In this paper, we examine empirically the reaction of consumers to changes in the financial ratings of life insurers. We find that downgraded life insurers in the period...

Dearth of market values for firms in several industries is a serious limitation in empirical research. Book value and other proxies may not be satisfactory surrogates. This study provides the methodologies of matching-allocation and multiple imputation as remedies for lack of marked-to-market...

Capital structure studies have been occupied for several years with the questions of whether firms have targets for their capital structure and whether they rebalance actual capital structure towards those targets. Such studies routinely exclude the financial sector from their purview. In this...