Megainstitutions and Financial Instability: The challenges for prudential regulation

Vol. 20 No. 2 (2000)

Apr-Jun / 2000
Published April 1, 2000
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Cintra, Marcos Antonio Macedo, and Maria Cristina Penido de Freitas. 2000. “Megainstitutions and Financial Instability: The Challenges for Prudential Regulation”. Brazilian Journal of Political Economy 20 (2):351-61. https://doi.org/10.1590/0101-31572000-1239.

Megainstitutions and Financial Instability: The challenges for prudential regulation

Marcos Antonio Macedo Cintra
Doutor em Economia pelo Instituto de Economia da Unicamp e pesquisador da Fundap/Diretoria de Economia do Setor Público, São Paulo/SP, Brasil.
Maria Cristina Penido de Freitas
Doutora em Economia pela Université Paris XIII e pesquisadora da Fundap/Diretoria de Economia do Setor Público, São Paulo/SP, Brasil.
Brazilian Journal of Political Economy, Vol. 20 No. 2 (2000), Apr-Jun / 2000, Pages 351-361

Abstract

This paper analyses the recent process of the financial concentration in major industrialized
countries. It reveals that the formation of large diversified financial conglomerates
consolidates the so-called “full-service banking or financial supermarkets” in the United
States and the Allfinaz in Europe. It also evaluates the role played by these megainstitutions
in the intensification of financial instability due to increasing potential moral hazard and
the systemic risk. Finally, it deals with difficulties faced by authorities in the supervision and
control of these megabanks.

JEL Classification: G21; G34; L40.


Keywords: Mergers and acquisitions banks financial instability corporate governance