Recent empirical work on individual portfolio choice focuses on the role of the individual's health in making financial decisions. The key idea is that, through precautionary saving or reducing investors' time horizon, health issues make people choose safer financial portfolios. This paper questions the empirical relevance of the link between health and portfolio choice, measured as stockownership and overall fraction of risky securities held. We handle with caution the findings from previous papers and ask whether data from the first wave of the Survey of Health, Aging and Retirement in Europe (SHARE) are able to clarify some of our doubts. We find that only poor self-reported health negatively impacts the portfolio choice, while other health measures (chronic conditions, limitations in daily activities of life, mental health) are irrelevant for investment decisions.
Banking groups exploit double leverage when 'debt is issued by the parent company and the proceeds are invested in subsidiaries as equity' . Financial authorities have frequently raised concerns about the issue of double leverage because this type of intra-firm financing appears to allow for both the arbitrage of capital and the assumption of risk. This article focuses on the relationship between double leverage and risk-taking within banking groups. First, we discuss this relationship based on an examination of balance sheet figures. Second, we analyze a large sample of United States Bank Holding Companies (BHCs) from 1990-2014. The results show that BHCs are more prone to risk when they increase their double leverage, namely, when the stake of the parent within subsidiaries is larger than the standalone capital of the parent. This paper's primary implication for policymakers is that the regulators of complex financial entities should more efficiently address the issue of double leverage, thereby limiting the potential negative consequences that arise from corporate instability.
The study provides empirical evidence for the effect of reinsurance on solvency, profitability, and taxes of primary insurers. Our main finding is that primary insurers increasing in the use of reinsurance exhibit lower capital ratios. This impact involves the segments of health insurance, composite insurance, title insurance, and non-life insurance. Our interpretation is that reinsurance and capital can be seen as substitutes for improving solvency. This implies that, by sharing their risk with reinsurers, primary insurers can benefit from a relief on capital. Additional outcomes display an important relationship between demand and supply of reinsurance at the firm level, as we observe that, growing in the used reinsurance; primary insurers are more prone to providing reinsurance to other firms.
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