
Contents
-
-
-
-
-
-
-
-
4.1 Introduction 4.1 Introduction
-
4.2 Global Systemically Important Banks and Complexity 4.2 Global Systemically Important Banks and Complexity
-
4.3 If Not Constrained by Regulations and Taxes, What Degree of Corporate Complexity Would G-Sibs Prefer? 4.3 If Not Constrained by Regulations and Taxes, What Degree of Corporate Complexity Would G-Sibs Prefer?
-
4.3.1 Asymmetric Information and Transactions Costs 4.3.1 Asymmetric Information and Transactions Costs
-
4.3.2 Asymmetric Information: Shareholders vs. Creditors 4.3.2 Asymmetric Information: Shareholders vs. Creditors
-
4.3.3 Asymmetric Information: Shareholders vs. Managers and Internal Agency Problems 4.3.3 Asymmetric Information: Shareholders vs. Managers and Internal Agency Problems
-
4.3.4 Information Asymmetry: Customer Concerns about Conflicts of Interest 4.3.4 Information Asymmetry: Customer Concerns about Conflicts of Interest
-
4.3.5 Costs of Financial Distress: Protecting the Group from a Risky Subsidiary 4.3.5 Costs of Financial Distress: Protecting the Group from a Risky Subsidiary
-
4.3.6 Costs of Financial Distress: Protecting a Subsidiary from the Rest of the Group 4.3.6 Costs of Financial Distress: Protecting a Subsidiary from the Rest of the Group
-
4.3.7 The Legacy of Mergers and Acquisitions 4.3.7 The Legacy of Mergers and Acquisitions
-
-
4.4 Tax Frictions 4.4 Tax Frictions
-
4.5 Regulatory Constraints 4.5 Regulatory Constraints
-
4.6 Implications of Corporate Complexity for Safety and Soundness of the Financial System 4.6 Implications of Corporate Complexity for Safety and Soundness of the Financial System
-
4.6.1 The Collapse of Lehman Brothers and the Impetus for Reform 4.6.1 The Collapse of Lehman Brothers and the Impetus for Reform
-
-
4.7 Policy Reforms to Deal with G-Sibs: An Overview 4.7 Policy Reforms to Deal with G-Sibs: An Overview
-
4.7.1 Global Initiatives 4.7.1 Global Initiatives
-
4.7.2 The US Response 4.7.2 The US Response
-
-
4.8 Concluding Comment 4.8 Concluding Comment
-
References References
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4 Complexity and Systemic Risk: What’s Changed Since the Crisis?
Get accessRichard J. Herring is Jacob Safra Professor of International Banking and Professor of Finance at The Wharton School, University of Pennsylvania, where he is also Director of The Wharton Financial Institutions Center. Outside the University he serves on the FDIC Systemic Risk Advisory Committee and the Systemic Risk Council. His research focuses on banking and financial market regulation and supervision.
Jacopo Carmassi is a Senior Financial Stability Expert in the Financial Regulation and Policy Division, DG Macroprudential Policy and Financial Stability, at the European Central Bank. He is a Fellow of CASMEF, the Arcelli Center for Monetary and Financial Studies, University LUISS Guido Carli, and a Fellow of the Wharton Financial Institutions Center, University of Pennsylvania. Previously, he worked as an economist at Assonime, the Association of Joint Stock Companies incorporated in Italy, and at the Italian Banking Association. He holds a Ph.D in Law and Economics from University LUISS Guido Carli of Rome. He is author of several publications on banking and financial regulation topics, including the 2007–9 Global Financial Crisis, bank capital rules, bank crisis resolution, deposit insurance, banking union in Europe, and the corporate complexity of Global Systemically Important Banks.
-
Published:07 April 2015
Cite
Abstract
This chapter updates and extends our earlier work on the corporate complexity of large international banks (chapter 8 in the first edition of this handbook). Much has happened since 2007, when that first version was published. At that time, the issue of large, complex financial institutions had just begun to catch the attention of some policymakers, but the collapse of Lehman Brothers in September 2008 highlighted the problem. The Lehman crisis revealed that policymakers were totally unprepared to resolve a large, cross-border financial institution without causing damaging spillovers or requiring taxpayer support. After the crisis, the Financial Stability Board (FSB) negotiated a framework for the resolution of the so-called globally systemically important banks (G-SIBs) to be adopted by each member country. The chapter begins with an overview of G-SIBs, and examines how their complexity has changed since the crisis. We then consider what corporate structure banks would prefer in the absence of tax and regulatory constraints. Next we introduce tax and regulatory constraints and show that they appear to motivate a considerable amount of corporate complexity. Finally, we analyze some post-crisis policy initiatives to tackle the too-big-to-fail (TBTF) problem and improve the resolution framework. Our conclusion emphasizes the importance of enhancing transparency and market discipline to deal with these problems and urges that the authorities reexamine some of the tax and regulatory factors that have motivated banks to adopt increasingly complex corporate structures.
Sign in
Personal account
- Sign in with email/username & password
- Get email alerts
- Save searches
- Purchase content
- Activate your purchase/trial code
- Add your ORCID iD
Purchase
Our books are available by subscription or purchase to libraries and institutions.
Purchasing informationMonth: | Total Views: |
---|---|
October 2022 | 3 |
December 2022 | 3 |
January 2023 | 2 |
February 2023 | 4 |
March 2023 | 11 |
April 2023 | 3 |
May 2023 | 4 |
June 2023 | 4 |
July 2023 | 2 |
August 2023 | 1 |
September 2023 | 4 |
October 2023 | 3 |
November 2023 | 4 |
December 2023 | 2 |
January 2024 | 2 |
February 2024 | 3 |
March 2024 | 1 |
April 2024 | 1 |
May 2024 | 3 |
June 2024 | 4 |
July 2024 | 1 |
January 2025 | 2 |
March 2025 | 1 |
April 2025 | 3 |
Get help with access
Institutional access
Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. If you are a member of an institution with an active account, you may be able to access content in one of the following ways:
IP based access
Typically, access is provided across an institutional network to a range of IP addresses. This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account.
Sign in through your institution
Choose this option to get remote access when outside your institution. Shibboleth/Open Athens technology is used to provide single sign-on between your institution’s website and Oxford Academic.
If your institution is not listed or you cannot sign in to your institution’s website, please contact your librarian or administrator.
Sign in with a library card
Enter your library card number to sign in. If you cannot sign in, please contact your librarian.
Society Members
Society member access to a journal is achieved in one of the following ways:
Sign in through society site
Many societies offer single sign-on between the society website and Oxford Academic. If you see ‘Sign in through society site’ in the sign in pane within a journal:
If you do not have a society account or have forgotten your username or password, please contact your society.
Sign in using a personal account
Some societies use Oxford Academic personal accounts to provide access to their members. See below.
Personal account
A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions.
Some societies use Oxford Academic personal accounts to provide access to their members.
Viewing your signed in accounts
Click the account icon in the top right to:
Signed in but can't access content
Oxford Academic is home to a wide variety of products. The institutional subscription may not cover the content that you are trying to access. If you believe you should have access to that content, please contact your librarian.
Institutional account management
For librarians and administrators, your personal account also provides access to institutional account management. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more.