The pricing of deposit insurance in the presence of systematic risk

Based on the Merton (1977) put option framework, we develop a deposit insurance pricing model that incorporates asset correlations, a measurement for the systematic risk of a bank, to account for the risk of joint bank failures. Estimates from our model suggest that actuarially fair risk-based deposit insurance that considers only individual bank failure risk is underpriced, leaving insurance providers exposed to net losses. Our estimates also capture the size premium where big banks are priced with higher deposit insurance than small banks. This result is particularly relevant to the current regulatory concerns on big banks that are too-big-to-fail. Above all, our approach provides a unifying framework for integrating risk-based deposit insurance with risk-based Basel capital requirements.

Cholinesterase Research Outreach Project (CROP): measuring cholinesterase activity and pesticide use in an agricultural community

BACKGROUND: Australian farmers and their workers are exposed to a wide variety of pesticides. Organophosphate (OP) insecticides are a widely used class of pesticide used for animal husbandry practices (Naphthalophos for sheep dipping, jetting and drench), crop production for pest control (Dimethoate) and in public health (Maldison for head lice). Acute poisonings with this class of insecticide are reported among agricultural workers and children around the globe, due to the inhibition of acetylcholinesterase (AChE). Less is known about chronic exposures. Regular monitoring of erythrocyte AChE will enable farmers to identify potential exposure to organophosphate insecticides and take action to reduce exposures and improve their health and safety practices. This study aims to assess and improve the integration of AChE monitoring into routine point of care health clinics, and provide farming and non-farming people with a link between their AChE activity and their household chemical and agrichemical use. METHODS/DESIGN: The research will target individuals who work on mixed farming enterprises and routinely using OPs (n = 50) and non-farmers (n = 30). Baseline data are collected regarding demographic, health conditions and behaviours, Kessler 10 (K10) scores, chemical use and personal protection. Baseline anthropometric measures include height, weight, hip and waist circumference, body fat analysis and, biochemical analysis of fasted total serum cholesterol, triglycerides, low-density cholesterol (LDL), high-density cholesterol (HDL) and blood glucose. Analysis of erythrocyte cholinesterase (EAChE) activity is also conducted using a finger prick test. Testing of EAChE is then repeated in all participants every 3 weeks for a maximum of three times over a period 10 weeks. Participants are provided with full feedback and counselling about their EAChE activity after each reading and a detailed summary provided to all participants at the completion of the study. Data will be analysed using repeated measures within a general linear model. DISCUSSION: This work will provide an evidence base and recommendations for the integration of EAChE monitoring into Australian rural health clinics, leading to research which will further quantify pesticide exposure both on the farm and in the home, highlighting the importance of sustaining and providing a safe work and home environment for farming communities. TRIAL REGISTRATION: ACTRN12613001256763.

Firm compliance with social insurance obligations where there is a weak surveillance and enforcement mechanism: empirical evidence from Shanghai

This article examines why firms in Shanghai comply or over-comply with social insurance obligations in a regulatory environment where the expected punishment for non-compliance is low. Our first finding is that firms found to be in non-compliance in the first audit in 2001 were moved into a separate violation category and the probability of being reaudited in 2002 was significantly higher if the firm was in that category. Our second main result is that, across the board, firms which were reaudited continued to underpay in 2002 but the extent of underpayment was significantly reduced. © 2007 The Authors. Journal compilation © 2007 Blackwell Publishing Ltd.

Migration and the right to social security: perceptions of off-farm migrants' rights to social insurance in China's Jiangsu Province

In 2001 China ratified the International Covenant on Economic, Social and Cultural Rights. By so doing the national government became legally bound, "to the maximum of its available resources", to achieve "progressively" full realization of the rights specified in the Covenant. Included amongst these entitlements is the "right of everyone to social security, including social insurance". This paper uses data from Jiangsu to examine the extent to which urbanites agree that previously disenfranchised migrants have the same right to social insurance as the urban population. Many urbanites fear that their existing entitlements to social protection will be diluted if social insurance coverage is extended to include new populations. Accordingly, state agencies and the media have sought to promote acceptance of a more positive view of migrant workers than has traditionally prevailed within towns and cities. We find that younger urban residents, urban residents who already have social insurance and urban residents working in the state-owned sector are more likely to agree that migrants have the same right to social insurance as the urban population. © 2007 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Urban social insurance and worker satisfaction in China: Implications for India

This paper draws on a unique survey of urban employees in Jiangsu that was designed to assist analysis of workers' satisfaction with the urban social insurance scheme in China, and sheds light on whether workers in the urban non-state sector are satisfied with the level of social insurance coverage and whether their perceptions compare favourably with workers in the state-owned sector. It also discusses the globalisation and social protection debate in India and draws implications for the Indian experience from both our perception research and China's experience with urban social insurance reform more generally.

Establishing insurance markets in settler economies. a comparison of Australian and South Africa insurance markets, 1820-1910

How did insurance markets in the settler economies of Australia and South Africa develop? This paper investigates the establishment of the local insurance industries in two settler economies in the wake of the absence of comparative studies in the emergence of insurance markets in the periphery. The paper compares conditions in these settler economies and notes the innovative role of local entrepreneurs. British insurance companies extended operations into the British colonies, but local interests emerged to challenge their dominance. Innovations in organisational form, product offerings and distribution channels afforded local entrepreneurs a competitive advantage in the life market. Collusion in the fire market restricted innovative practices and retained foreign control. This article explains the agency of local entrepreneurs in the emergence of insurance markets in two settler societies at the end of the nineteenth century. This historical development path has notable implications for the current development of insurance markets in Africa.

Marketing the message: the making of the Market for Life Insurance in Australia, 1850–1940

During the late nineteenth century, sales of life insurance products in Australia increased at a rapid rate. An investigation of the way in which life insurance products were targeted to the consumers provides insights not only into the marketing approaches, but also the changing nature of the mutual organization. This article uses a “stages” approach to analyze the evolution of the marketing message. The experience of Australian mutual insurers suggests that marketing strategies, as with other types of organizational skills, evolve in response to both the prevailing business environment and the ability of the firm to acquire and implement new knowledge and ways of conducting business.