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The regulation and supervision of domestic financial conglomerates


  • Scott, David H.
  • EXT


Financial conglomerates are groups of financial institutions related by ownership or control. Specific regulatory and supervisory issues arise when financial services -- such as commercial and retail banking, securities underwriting and trading, investment management, and insurance underwriting -- are provided by a financial conglomerate structure. The author provides a handbook for authorities responsible for financial conglomerate regulation and supervision, identifying key issues, spelling out regulatory and supervisory alternatives, and describing both preferred solutions and alternatives. He makes reference to the regulatory framework adopted in the European Economic Community. Among the main tools available to the authorities are prudential regulations, accounting consolidation, and consolidated supervision. Prudential regulation for financial conglomerates preferably would be applied on a uniform and fully consolidated basis. Alternatively, existing regulations applicable to different financial sectors can be modified, in particular to mitigate the potential that intragroup transactions overstate capital or earnings. Accounting consolidation of the financial entities in a group is a prerequisite for consolidated prudential regulation and improves the transparency of the group's financial position. The authorities should use consolidated supervision to ensure that the risks from all group entities are identified and assessed.

Suggested Citation

  • Scott, David H. & EXT, 1994. "The regulation and supervision of domestic financial conglomerates," Policy Research Working Paper Series 1329, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1329

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    Cited by:

    1. Fernández Montt, René, 2006. "¿Ges O No Ges? Esa Es La Cuestión
      [Ges or not ges? That is the question]
      ," MPRA Paper 2524, University Library of Munich, Germany, revised Feb 2007.
    2. D. Croff, 1999. "Global supervision, financial stability and risk control: a banker’s view," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 52(209), pages 127-147.
    3. D. Croff, 1999. "Global supervision, financial stability and risk control: a banker’s view," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 52(209), pages 127-147.
    4. Claessens, Stijn & Klingebiel, Daniela, 1999. "Alternative frameworks for providing financial services," Policy Research Working Paper Series 2189, The World Bank.


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