Balancing equity and policyholder protection: Assessing insurer’s interests in green lending under cap-and-trade regulations

doi:10.1371/journal.pone.0293975

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Title:	Balancing equity and policyholder protection: Assessing insurer’s interests in green lending under cap-and-trade regulations
Authors:	Chen, Shi;Zhao, Yong-hong;Chiu, Shiu-chieh;Wu, Jingfei;Lin, Jyh-horng
Keywords:	Cap-and-trade;Capped barrier cap option;Dragon king;Green finance
Date:	2023-11-06
Issue Date:	2024-07-31 12:06:30 (UTC+8)
Publisher:	Energy Economics
Abstract:	This paper presents a contingent claim model designed to assess an insurer’s equity within the framework of carbon trading regulations imposed on borrowing firms while also considering the integration of green lending. The development of this model is particularly relevant for regions with established carbon trading markets, with a specific focus on the post-period following the 2015 Paris Agreement concerning climate change. We focus on shareholders and policyholders to optimize equity and ensure maximum protection. Strict caps in capand- trade harm interest margins, reducing guaranteed rates for equity maximization and compromising policyholder protection. Government intervention through sustainable production carbon trading hinders win-win outcomes. Green subsidies can improve insurer margins, but achieving win-win solutions remains challenging. A collective approach is needed to share sustainable production and finance benefits among diverse economic sectors.
Relation:	PLoS ONE 18(11),　e0293975
DOI:	10.1371/journal.pone.0293975
Appears in Collections:	[Graduate Institute & Department of International Business] Journal Article

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