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Risk in Financial Conglomerates: Management and Supervision

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Author Info
Iman van Lelyveld (De Nederlandsche Bank, Directorate of Supervision)
Arnold Schilder (De Nederlandsche Bank, Directorate of Supervision)

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

Other versions of this item:

Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
  18. Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-19, June. [Downloadable!] (restricted)
    Other versions:
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    Other versions:
  21. Franklin Allen & Richard Herring, 2001. "Banking Regulation versus Securities Market Regulation," Center for Financial Institutions Working Papers 01-29, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Schüler, Martin, 2004. "Integrated Financial Supervision in Germany," ZEW Discussion Papers 04-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  2. Henriëtte 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. [Downloadable!]
  3. Stephanou, Constantinos, 2005. "Supervision of financial conglomerates : the case of Chile," Policy Research Working Paper Series 3553, The World Bank. [Downloadable!]
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