Credit Crunch and Insurance Consumption: The Aftermath of the Subprime Mortgage Crisis

27 Pages Posted: 9 Aug 2018

See all articles by Shinichi Kamiya

Shinichi Kamiya

Nanyang Business School, Nanyang Technological University

Multiple version iconThere are 2 versions of this paper

Date Written: September 2018

Abstract

Using cross‐state panel data of the U.S. personal auto insurance premiums from 2007 to 2012, this study provides evidence that consumer purchases of insurance were reduced by more than expected from losses of risk exposure during and after the subprime mortgage crisis. Analyses show that the credit crunch of auto loans and a deterioration of net worth in housing resulting from the bursting housing bubble contributed to the reduced consumption of auto insurance. This result is robust even after controlling for associated factors, such as the insurance price, personal spending on vehicles, and general consumption. These findings provide evidence for a real effect of the financial crisis.

Suggested Citation

Kamiya, Shinichi, Credit Crunch and Insurance Consumption: The Aftermath of the Subprime Mortgage Crisis (September 2018). Journal of Risk and Insurance, Vol. 85, Issue 3, pp. 721-747, 2018, Available at SSRN: https://ssrn.com/abstract=3228189 or http://dx.doi.org/10.1111/jori.12167

Shinichi Kamiya (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
443
PlumX Metrics