Corpus ID: 168740404

The perverse incentive for insurance instruments that are derivatives: solving the jackpot problem with a clawback lien for default insurance notes

@article{Hanley2017ThePI,
  title={The perverse incentive for insurance instruments that are derivatives: solving the jackpot problem with a clawback lien for default insurance notes},
  author={B. Hanley},
  journal={arXiv: General Finance},
  year={2017}
}
  • B. Hanley
  • Published 2017
  • Business, Economics
  • arXiv: General Finance
When an insurance note is also a derivative a serious problem arises because a derivative must be fulfilled immediately. This feature of derivatives prevents claims processing procedures that screen out ineligible claims. This, in turn, creates a perverse incentive for insured holders of notes to commit acts that result in payment. This problem first surfaced with CDS contracts, which are part of a class of loan insurance I term a default insurance note. Without an address to this problem… Expand

Figures from this paper

The Impact of LIBOR Linked Borrowing to Cover Venture Bank Investment Loans Creates a New Systemic Risk
A New Form of Banking -- Concept and Mathematical Model of Venture Banking

References

SHOWING 1-6 OF 6 REFERENCES
Default Insurance Notes to Implement Venture Banking
Release of the Kraken: A Novel Money Multiplier Equation’s Debut in 21st Century Banking
  • B. Hanley
  • Computer Science, Economics
  • ArXiv
  • 2014
We have met the enemy and he is us
Judge Blocks Citigroup Settlement with S.E.C
  • 2011
Testing the Bankruptcy Code Safe Harbors in the Current Financial Crisis
  • American Bankruptcy Institute Law Review,
  • 2010