This research effort is exploring how best to stimulate long-term infrastructure investment by institutional investors such as pension funds, insurance companies, and sovereign wealth funds.
The Effect of Solvency Regulations and Accounting Standards on Long-Term Investing is one of the reports emerging from this project. This report reviews recent as well as planned changes to accounting and solvency regulations affecting insurers and pension funds and how they may impact long-term investing by these institutions. It focuses mainly on the impact of risk-based solvency requirements and concludes that strict fair value and risk-based solvency rules should be used with caution since they can lead to pro-cyclical investment behavior, such as the fire-sale of assets in market downturns.
