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Financial resilience of insurance network during Covid-19 pandemic

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  • Alessandra Cornaro

    (University of Milano - Bicocca)

Abstract

We provide a novel approach for analysing the financial resilience of the insurance sector during coronavirus pandemic. To this end, we build temporal directed and weighted networks where the weights on the arcs take into account the tail dependence between couple of firms. To assess the resilience of the network, we provide a new global indicator, aimed at capturing the impact on the clustering coefficient of a shock affecting in turn each firm and diffusing in the network via shortest paths. A local measure of resilience is also provided by quantifying the contribution of each firm to the global indicator. In this way, we are able to detect most critical firms in the system. A numerical application has been developed in order to test the proposed approach. The results show that the proposed resilience measure appears able to detect main periods of financial crises. The first wave of COVID-19 pandemic results as a extreme phenomenon in the market and the lowest resilience is associated to the period in which COVID-19 has been declared pandemic.

Suggested Citation

  • Alessandra Cornaro, 2023. "Financial resilience of insurance network during Covid-19 pandemic," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(2), pages 151-172, December.
    • Handle: RePEc:spr:qualqt:v:57:y:2023:i:2:d:10.1007_s11135-022-01583-7
    DOI: 10.1007/s11135-022-01583-7
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    More about this item

    Keywords

    COVID-19; Insurance market; Resilience; Complex networks; Clustering Coefficient;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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