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Could we rely on credit swap hedging as a substitute for insurer blockchain technology involvement?

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  • Lin, Jyh-Horng
  • Li, Xuelian
  • Lin, Panpan

Abstract

Could we rely on credit swap hedging as a substitute for insurer blockchain technology involvement? This paper is to develop a two-stage contingent claim model to answer the question. We have three main results. First, blockchain helps the policyholder protection when blockchain involvement is relatively large-scale, helps the insurer's survival probability when blockchain involvement is relatively small-scale and helps enable greater efficiency. Second, credit swap hedging adversely affects policyholder protection and increases a higher likelihood of insurer survival. The life insurance company could regard credit swap hedging as a strategic substitute for blockchain involvement. Third, capital regulation makes the insurer more prone to blockchain involvement, thereby accelerating the transformation of the insurance system.

Suggested Citation

  • Lin, Jyh-Horng & Li, Xuelian & Lin, Panpan, 2022. "Could we rely on credit swap hedging as a substitute for insurer blockchain technology involvement?," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 266-281.
    • Handle: RePEc:eee:reveco:v:80:y:2022:i:c:p:266-281
    DOI: 10.1016/j.iref.2022.02.023
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    More about this item

    Keywords

    Blockchain technology; Credit swap hedging; Life insurance policy; Technology efficiency;
    All these keywords.

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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