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Capital adequacy regulation and financial conglomerates

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  • Mälkönen , Ville

    ()
    (Bank of Finland Research)

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    Abstract

    A topical concern in public-policy debate is that the current capital adequacy regulation designed for stand-alone financial institutions exhibits several weaknesses due to the emergence of large financial institutions combining several activities under common control. This paper addresses these concerns using a theoretical framework derived from the economic literature. I will first describe the possible causes of the emergence of financial conglomerates, proceed to consider the theoretical background for the regulation of financial institutions, especially insurance and banking companies, and, finally, examine the limitations of the current regulatory framework in controlling the risks in financial conglomerates. My conclusions provide little support for the view that the regulatory approach should be modified towards a more consolidated one (ie harmonization).

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    File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/0410.pdf
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    Bibliographic Info

    Paper provided by Bank of Finland in its series Research Discussion Papers with number 10/2004.

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    Length: 32 pages
    Date of creation: 14 May 2004
    Date of revision:
    Publication status: Published in Journal of International Banking Regulation, 2004, pages 33-52.
    Handle: RePEc:hhs:bofrdp:2004_010

    Contact details of provider:
    Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
    Web page: http://www.suomenpankki.fi/en/
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    Related research

    Keywords: banking; capital adequacy regulation; insurance; financial conglomerates;

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    References

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    Cited by:
    1. Freixas, Xavier & Loranth, Gyongyi & Morrison, Alan D., 2007. "Regulating financial conglomerates," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 479-514, October.
    2. Holopainen, Helena, 2007. "Integration of financial supervision," Research Discussion Papers 12/2007, Bank of Finland.

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