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Risk in Financial Conglomerates: Management and Supervision

Iman Lelyveld and Arnold Schilder
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Arnold Schilder: De Nederlandsche Bank, Directorate of Supervision

Finance from University Library of Munich, Germany

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.

Keywords: supervision; financial conglomerates; banks; insurers; diversification (search for similar items in EconPapers)
JEL-codes: G21 G22 G28 (search for similar items in EconPapers)
Date: 2003-01-09
New Economics Papers: this item is included in nep-cfn, nep-com, nep-fin, nep-mfd and nep-rmg
Note: Type of Document - pdf; prepared on IBM PC; to print on HP;
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