Overview
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 | ||