Financial Stability and the Corporate Structure of G-SIBs

Saturday April 18, 2020

The Wharton School, University of Pennsylvania


Session 1. Does corporate complexity matter for financial stability? 

1.1 How should corporate complexity be defined?

1.2 Does it hinder effective supervision? Or does it improve the effectiveness of supervision?  (Peter Conti-Brown)

1.3 Does it exacerbate the problem of resolving a nonviable institution? Or does it enhance resolvability?

1.4 How do the consequences of corporate complexity differ from the consequences of scale?

Session 2. Why do banks choose such complicated corporate structures?

2.1 Tax incentives? (Jacopo a-e?)

2.2 Regulatory constraints?

2.3 To insulate the bank or some of its subsidiaries from some kinds of risky activities?

2.4 Costs of consolidating acquisitions?

2.5 Sloppy housekeeping?

2.6 The achievement of subsidies that may arise from being perceived as too complex to fail?

2.7 Does corporate complexity facilitate good corporate governance?

2.8 How do bank choices regarding corporate structure differ from those made by non-financial firms? (Nicola Cetorelli)

Session 3.  What would be the most meaningful measure of corporate complexity?

3.1 What is the ideal measure? (Jacopo a-c?)

3.2 What data collection and disclosure requirements would this entail?

3.3 What are the key impediments to more transparent disclosures of corporate complexity?

3.4 Given current data collection and disclosure practices, what is the best indicator of corporate complexity?

Session 4.  Policy issues regarding corporate complexity

4.1 How should complexity that is intended to facilitate an orderly resolution (e.g. US Intermediate Holding Company Regulations and comparable EU regulations) be distinguished from complexity that impedes resolution?

4.1a Do these kinds of requirements enhance global financial stability?

4.2 How should Single Point of Entry Strategies affect the design and interpretation of measures of corporate complexity? (Christina Skinner)

4.3 Should corporate complexity be measured differently for banks in countries that intend to follow Multiple Points of Entry Strategies? (Christina Skinner)

4.4 Should corporate complexity be included in the BCBS G-SIB methodology? If so, what is the most plausible way to introduce the concept of corporate complexity in the G-SIB methodology?  (Note, although the Complexity category claims to incorporate the idea, the individual proxy indicators have nothing to do with corporate complexity.)

Session 5.  What are useful next steps?

5.1 Conferences with papers focused on particular topics?

5.2 A high-profile conference involving key policymakers?

5.3 Other?

 

A Structural View of U.S. Bank Holding Companies
Dafna Avraham, Patricia Selvaggi, and James Vickery


Basel Committee on Banking Supervision
SCO40 Global systemically important banks

(Version effective as of 15 Dec 2019)
Bank for International Settlements


Resolving Globally Active, Systemically Important, Financial Institutions
A joint paper by the Federal Deposit Insurance Corporation and the Bank of England
(10 December 2012)


Measures of Global Bank Complexity
Nicola Cetorelli and Linda S. Goldberg


Transformation of Corporate Scope in U.S. Banks: Patterns and Performance Implications
Nicola Cetorelli, Michael G. Jacobides and Samuel Stern
(Federal Reserve Bank of New York Staff Report No. 813 May 2017)


Bank Complexity, Governance, and Risk
Ricardo Correa (Federal Reserve Board) and Linda Goldberg (Federal Reserve Bank of New York and NBER)
Draft Version: February 3, 2020


Complexity in Large U.S. Banks
Linda Goldberg and April Meehl
(Federal Reserve Bank of New York Staff Report No. 880 February 2019, Revised September 2019)


JPMorgan Chase & Co. 2019 Resolution Plan Public Filing


The Role of Complexity for Bank Risk during the Financial Crisis: Evidence from a Novel Dataset
Krause, Thomas; Sondershaus, Talina; Tonzer, Lena
(IWH Discussion Papers, No. 17/2016)