The rationale behind the increasing role of European insurance companies in shadow banking activities: The case of loans and mortgages

In this master thesis we explored the rationale behind the increasing role of insurance companies in shadow banking activities, especially loans and mortgages, in Europe since the financial crisis of 2007-2009. By comparing the Basel II Standardized Approach with Solvency II Standardized Approach and analysing data, we found that European insurance companies have financial incentives to invest in loans and mortgages. Furthermore, we found that the specificities of the business model of insurance companies as well as the low interest rates environment also provide incentives to insurers to invest in loans and mortgages.