Research Discussion Papers, Bank of Finland
No 10/2004:
Capital adequacy regulation and financial conglomerates
Ville Mälkönen ()
Abstract: A topical concern in public-policy debate is that the
current capital adequacy regulation designed for stand-alone financial
institutions exhibits several weaknesses due to the emergence of large
financial institutions combining several activities under common control.
This paper addresses these concerns using a theoretical framework derived
from the economic literature. I will first describe the possible causes of
the emergence of financial conglomerates, proceed to consider the
theoretical background for the regulation of financial institutions,
especially insurance and banking companies, and, finally, examine the
limitations of the current regulatory framework in controlling the risks in
financial conglomerates. My conclusions provide little support for the view
that the regulatory approach should be modified towards a more consolidated
one (ie harmonization).
Keywords: banking; capital adequacy regulation; insurance; financial conglomerates; (follow links to similar papers)
JEL-Codes: G21; G22; G28; (follow links to similar papers)
32 pages, May 14, 2004
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- This paper is published as:
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Mälkönen, Ville, (2004), 'Capital adequacy regulation and financial conglomerates', Journal of International Banking Regulation, Vol. 6, October, No. 1, pages 33-52
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