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Risk in Financial Conglomerates: Management and Supervision

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  • Iman van Lelyveld
  • Arnold Schilder

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.

Suggested Citation

  • Iman van Lelyveld & Arnold Schilder, 2002. "Risk in Financial Conglomerates: Management and Supervision," Research Series Supervision (discontinued) 49, Netherlands Central Bank, Directorate Supervision.
  • Handle: RePEc:dnb:ressup:49
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    Cited by:

    1. International Monetary Fund, 2006. "South Africa; Selected Issues," IMF Staff Country Reports 06/328, International Monetary Fund.
    2. 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.
    3. Bernd Fitzenberger & Ralf A. Wilke, 2010. "Unemployment Durations in West Germany Before and After the Reform of the Unemployment Compensation System during the 1980s," German Economic Review, Verein für Socialpolitik, vol. 11, pages 336-366, August.
    4. 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.
    5. Jan Willem van den End, 2010. "Liquidity Stress-Tester: A Model for Stress-testing Banks' Liquidity Risk," CESifo Economic Studies, CESifo, pages 38-69.
    6. 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.
    7. Gaël Hauton & Jean-Cyprien Héam, 2015. "Interconnectedness of Financial Conglomerates," Risks, MDPI, Open Access Journal, vol. 3(2), pages 1-25, May.
    8. van Lelyveld, Iman & Knot, Klaas, 2009. "Do financial conglomerates create or destroy value? Evidence for the EU," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2312-2321, December.
    9. Stephanou, Constantinos, 2005. "Supervision of financial conglomerates : the case of Chile," Policy Research Working Paper Series 3553, The World Bank.

    More about this item

    Keywords

    supervision; financial conglomerates; banks; insurers; diversification.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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