Yale School of Management

Posts by Analyses of Specific Interventions

Countries Continue to Adopt and Update Credit Guarantee Schemes for Small Business Lending

June 29, 2020

In response to the COVID-19 pandemic, many countries quickly announced credit guarantee schemes to support lending to small and medium-sized enterprises (SMEs). Under a credit guarantee scheme, the government fully or partially guarantees the value of a loan to an SME, which minimizes the risk to the lender, incentivizing the lender to provide credit. According to recent data from the World Bank, 41 countries have launched 57 credit guarantee schemes for SMEs this year. 

Continue reading “Countries Continue to Adopt and Update Credit Guarantee Schemes for Small Business Lending”

COVID-19 and Insurance (3 of 3): Capital Conservation and Countercyclical Regulation

June 17, 2020

Insurance supervisors around the world outside the U.S. have urged companies they supervise to conserve capital during the COVID-19 crisis by limiting payouts to shareholders and bonuses to executives. 

At the same time, many supervisors have sought to help insurers avoid procyclical behavior by mitigating the impact of volatile market swings on the value of insurance company assets and, in turn, on measures of their capital adequacy. 

Continue reading “COVID-19 and Insurance (3 of 3): Capital Conservation and Countercyclical Regulation”

COVID-19 and Insurance (2 of 3): Operational Regulatory Relief

June 16, 2020

Many insurance supervisors have provided temporary relief to help companies manage during the COVID-19 crisis.

Most of this relief comes in the form of extended deadlines for submitting various reports or provisions that make remote compliance easier. Regulators have also suspended supervisory activities and loosened accounting rules.

Continue reading “COVID-19 and Insurance (2 of 3): Operational Regulatory Relief”

COVID-19 and Insurance (1 of 3): Helping Individuals and Businesses

June 15, 2020

Insurance companies face unusual challenges during the COVID-19 crisis. This blog describes efforts by companies and their supervisors to:

  • Reduce financial burdens on insurance customers, for example, by allowing them to defer premium payments. 
  • Resolve the controversy over whether existing insurance coverage extends to businesses that have lost revenue during the crisis.
Continue reading “COVID-19 and Insurance (1 of 3): Helping Individuals and Businesses”

Governments Provide SMEs with Relief for Non-Wage Fixed Costs

June 8, 2020

As countries adopt measures to respond to the ongoing COVID-19 crisis, many are providing support to businesses for fixed costs. Fixed costs are those that do not change with the amount of product or services a firm provides. Though a small business may be able to decrease variable costs in response to diminished demand or a government-mandated suspension of operations, small and medium-sized enterprises (SMEs) still face the ongoing burden of fixed costs.

Continue reading “Governments Provide SMEs with Relief for Non-Wage Fixed Costs”

Countries Propose Catastrophe Insurance Through Public-Private Partnerships

June 2, 2020

On May 26, Congresswoman Caroyln Maloney introduced the Pandemic Risk Insurance Act of 2020 (PRIA). The PRIA would provide a framework for insurers to supply business interruption insurance to businesses affected by the COVID-19 pandemic. Insurance companies that choose to participate would offer pandemic coverage to businesses and, should aggregate insurance industry losses exceed $250 million, the federal government would cover most of the  losses.

Continue reading “Countries Propose Catastrophe Insurance Through Public-Private Partnerships”

Easing Liquidity Regulations to Counter COVID-19

April 27, 2020

Many countries are easing liquidity regulations to help banks get cash to their customers and to prevent liquidity shortages from spreading across financial markets. Countries are addressing liquidity shortages using two main tools: the liquidity coverage ratio (LCR), which most developed countries implemented in recent years as part of the Basel III agreements, and the more traditional reserve requirement ratio.

Continue reading “Easing Liquidity Regulations to Counter COVID-19”