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Risk in Financial Conglomerates: Management and Supervision

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  • Iman van Lelyveld

    (De Nederlandsche Bank, Directorate of Supervision)

  • Arnold Schilder

    (De Nederlandsche Bank, Directorate of Supervision)

Abstract

Financial conglomerates, combining banking, securities trading, and insurance, have become an important part of the financial landscape in many countries. Cross-sector consolidation has been fostered by trends such as disintermediation, globalization, and deregulation creating new challenges for both the group’s management as well as for regulators. We discuss the theoretical reasons why supervisors are interested in the riskiness of a financial firm and why – for firms – a similar concern emerges from the theory on risk management, both from a market and a firm perspective. After describing the Dutch institutional set-up, we turn to the discussion of the following question: How can a supervisor devise a framework of supervision that does justice to a financial conglomerate’s own responsibility and, at the same time, safeguards the general public’s interest? The framework, we feel, should be similar in flavor to the Supervisory Review, as proposed in the new Basel accord.

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Bibliographic Info

Paper provided by EconWPA in its series Finance with number 0301006.

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Date of creation: 09 Jan 2003
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Handle: RePEc:wpa:wuwpfi:0301006

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Web page: http://128.118.178.162

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Keywords: supervision; financial conglomerates; banks; insurers; diversification;

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References

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Citations

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Cited by:
  1. Henri�tte Prast & Iman van Lelyveld, 2004. "New Architectures in the Regulation and Supervision of Financial Markets and Institutions: The Netherlands," DNB Working Papers 021, Netherlands Central Bank, Research Department.
  2. Lelyveld, Iman van & Knot, Klaas, 2008. "Do financial conglomerates create or destroy value? Evidence for the EU," Research Report 08003, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  3. Schüler, Martin, 2004. "Integrated Financial Supervision in Germany," ZEW Discussion Papers 04-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Laurence Scialom, 2007. "Pour une politique d'actions correctives précoces dans l'Union européenne : les carences institutionnelles et légales," Revue d'Économie Financière, Programme National Persée, vol. 89(3), pages 111-121.
  5. Stephanou, Constantinos, 2005. "Supervision of financial conglomerates : the case of Chile," Policy Research Working Paper Series 3553, The World Bank.
  6. Szüle, Borbála, 2006. "A pénzügyi konglomerátumok létrejöttének kockázati hatásai
    [The risk effects of the evolution of financial conglomerates]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 661-680.

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