"New Challenges of Supervising Financial Conglomerates"

Valentina Peleckienė, Kęstutis Peleckis, Gitana Dudzevičiūtė

Abstract


The focus of this article is to analyse the development of large financial groups in the financial market called financial conglomerates, and to analyse the adequacy of their supervision, weather procedures and instruments of prudential supervision enable supervisory authorities to get the required information and to take effective decisions. In this article, the review of scientific literature allowed to distinguish three main typologies of financial conglomerate structures. Analysis shows that a large variety of financial conglomerate structures causes the risks of contagion, risk of concentration, management complexity and conflicts of interests and requires more intense and a different kind of their prudential supervision. The current European Union legislation provides for a comprehensive set of rules on prudential supervision, but the latest findings have indicated that group risks arise across the whole financial sector, underscoring the importance of the supplementary supervision of the links within financial groups and between financial institutions. Supplementary supervision on group risks will enhance financial stability and better protection of depositors, insurance policy holders and investors.

Keywords


financial conglomerate; financial conglomerate structure; supervision of financial conglomerates; financial groups

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"Intellectual Economics" ISSN online 1822-8038 / ISSN print 1822-8011