Banking on industry: does banking architecture matter for stability, industrial structure, and development? Event

Event details

The 2008 global financial crisis (GFC) has highlighted the fragility of the current banking system and has shifted the debate among policy makers towards the role of traditional and local banking for economic growth, and the access to credit of SMEs. Banking-related discussions with a focus on SMEs are particularly timely as SMEs are experiencing difficulties in recovering from the GFC, and are strongly dependent on bank financing. Moreover, in response to the recent Banking Recovery and Resolution Directive, some national authorities (for example the Bank of Italy and the Dutch Central Bank) have advocated the aggregation of cooperative banks in large groups. Changes in the architecture of the banking system raise concerns not only for local development and SMEs’ access to credit but also for the efficiency of a diversified banking ecosystem where each type of bank contributes to a healthy level of liquidity. How can cooperative banks preserve their main features, i.e. being local, mutual and not-for-profit, after the aggregation of cooperative banks in large groups? How and to what extent does the aggregation of cooperative banks in large groups make the system more resistant to shocks? How and to what extent can a diversified architecture of the banking system slow down the transfer of a shock from the banking sector to the real sector? A new set of regulatory requirements (e.g. Basel III, Bail-in etc), economic and political uncertainty, low risk tolerance: how and to what extent can these factors contribute to tighten banks’ credit standards on loans and steer them away from business lending? Does an optimal architecture of the banking system exist? What should it look like? These are just an example of questions that will be discussed and addressed at the workshop organized by the University of Southampton, together with Maastricht University and the University of Verona, on banking architecture and the implication for SMEs at Maastricht University on Friday 29th September. The workshop will bring together policy makers, bankers, regulators, entrepreneurs and economists to discuss ways of making our banking ecosystems more robust. The scope is to determine a clear and structured map of Europe’s main banking ecosystems, with well-defined roles for each type of bank. Those roles should translate into measurable parameters. The workshop will be both policy relevant (managing systemic risk, preserving diversity in the banking ecosystem) and of significant academic interest (assessing the relationship between systemic risk and business models). Find out more about this project here: http://bit.ly/PPSMDBankingOnIndustry