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    Risky Business: Multinationals, uncertainty and asymmetric Insurance


    Dewit, Gerda (2002) Risky Business: Multinationals, uncertainty and asymmetric Insurance. Economica, 69. pp. 357-370. ISSN 0013-0427

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    Abstract

    Risk management is vital to multinational enterprises (MNEs) facing uncertainty in foreign markets. One strand of the MNE literature demonstrates this by showing how various risks for which insurance does not exist alters MNEs’ international production decisions compared with when they operate under certainty. Other work deals with sources of uncertainty against which firms can hedge in financial markets. In this paper MNE behaviour is examined in the presence of risks for which insurance markets are missing but public insurance schemes are available instead. Such insurance schemes differ in one important respect from the coverage mechanisms available in financial markets. In forward and futures markets, firms can typically hedge without restrictions. By contrast, owing to the government’s involvement, public insurance alternatives tend to lack the global character of financial markets and often include explicit support for domestic economic activities.

    Item Type: Article
    Keywords: Risky Business: Multinationals; Asymmetric Insurance;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8442
    Depositing User: Gerda Dewit
    Date Deposited: 12 Jul 2017 10:57
    Journal or Publication Title: Economica
    Publisher: Wiley
    Refereed: Yes
    URI:

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