Recent financial crises have greatly contributed to the renewed interest in studying financial instability. It is now well understood that the cost of financial instability can be very high. Empirical studies have reported that across countries the average fiscal costs of banking resolution can be as high as 50 percent of GDP. Studies also suggest that deadweight economic costs of banking and currency crises occurring together, measured by cumulative output losses, can amount to as much as 30 percent of GDP.

One difficulty in analyzing financial instability, in addition to finding a widely accepted and applicable definition of it, lies in the fact that most of the crises manifest themselves in a seemingly unique manner and frequently require different policies to manage and resolve. The fact that many theoretical models and empirical analyses of financial crises build on a coordination failure and informational frictions reflects and often contributes to this difficulty.  

Thursday 7 June

9:15 Opening speech Sinikka Salo, Member of the Board, Bank of Finland
9:30-12 Session 1 Chair: Juha Tarkka (Bank of Finland)
  Paper Presentation Location Decisions of Foreign Banks and Competitive Advantage
  Author(s) Stijn Claessens (IMF), Neeltje Van Horen (World Bank)
  Comments Gerald Dwyer (FRB of Atlanta)
  Paper Presentation On the Independence of Assets and Liabilities: Evidence from U.S. Commercial Banks, 1990–2005
  Author(s) Robert DeYoung (University of Kansas), Chiwon Yom (FDIC)
  Comments George Kaufman (Loyola University, FRB of Chicago)
13:30-15:30 Session 2 Chair: Ari Hyytinen (Bank of Finland)
  Paper Presentation Monetary Policy and Financial (In)Stability: An Integrated Micro-Macro Approach
  Author(s)   Michael Koetter (University of Groningen), Ferre de Graeve (Ghent University), Thomas Kick (Deutsche Bundesbank)
  Comments Pierre Siklos (Wilfrid Laurier University)
  Paper Presentation How do Global Macro-Financial Shocks Affect Corporate Sector Expected Default Frequencies in the Euro Area?
  Author(s)   Olli Castrén (European Central Bank), Stephane Dées (European Central Bank), Fadi Zaher (European Central Bank)
  Comments Giorgio DiGiorgio (Universita LUISS Guido Carli)
16-18 Session 3 Chair: Juha Seppälä (University of Illinois-Urbana Champaign)
  Paper Presentation Cross border banking: challenges for deposit insurance and financial stability in the European Union
  Author(s)   Robert Eisenbeis (FRB of Atlanta, retired), George Kaufman (Loyola University, FRB of Chicago)
  Comments David Mayes (University of Auckland, Bank of Finland)
  Paper Presentation Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution?
  Author(s)   Larry D. Wall (FRB of Atlanta), David G. Mayes (University of Auckland, Bank of Finland), Maria J. Nieto (Banco de España)
  Comments Matti Suominen (Helsinki Business School, INSEAD)
Day 1 closing remarks

Friday 8 June

8:30-10:30 Session 4 Chair: Yair Haim (Central Bank of Israel) 
  Paper Presentation Stress Testing and Corporate Finance   
  Author(s)     Olivier DeBandt (Banque de France), C. Bruneau (Banque de France, University of Paris X), W. El Amri (Banque de France, University of Paris X)
  Comments Haibin Zhu (Bank of International Settlements)
  Paper Presentation Portfolio Effects and Efficiency of Lending under Basel II  
  Author(s) Esa Jokivuolle (Bank of Finland), Timo Vesala (Tapiola Group)
  Comments Rocco Huang (University of Amsterdam)
11-12 Session 5 Chair: Jouko Vilmunen (Bank of Finland)
  Paper Presentation Liquidity and Transparency in Bank Risk Management  
  Author(s) Lev Ratnovski (Bank of England, University of Amsterdam)
  Comments Mark Flannery (University of Florida)
  Paper Presentation How Does Competition Impact Bank Risk Taking?  
  Author(s)   Jesús Saurina (Banco de España, FRB of San Francisco), Gabriel Jiménez, Jose A. Lopez
  Comments Olivier DeJonghe (Ghent University)
14:30-16:30 Session 6 Chair: Tuomas Takalo (Bank of Finland)
  Paper Presentation Legal Origin, Investor Protection and Bank Risk-Taking: Evidence from Emerging Markets
  Author(s)   Rebel A. Cole (DePaul University), Rima Turk Ariss (Lebanese American University)
  Comments Kose John (New York University)
  Paper Presentation Using the balance sheet approach for financial stability surveillance 
  Author(s) Yair Haim (Bank of Israel), Roee Levy (Bank of Israel)
  Comments Michael Dietsch (Université Robert Schuman de Strasbourg)
Concluding remarks