Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/200909
Authors: 
Rhee, Keeyoung
Year of Publication: 
2017
Series/Report no.: 
KDI Policy Forum 266
Abstract: 
- The group-wide risks associated with business group affiliation must be reflected in capital regulations that assess the soundness of financial institutions. - When financial institutions hold shares with the intent to maintain control over a business group, the insolvency of one affiliate could rapidly spread throughout the entire group due to difficulties in disposing of the respective shares. - If such risks are not reflected in capital regulations, the capital adequacy of financial institutions [in groups] against losses may be assessed inaccurately. - It was found that the current capital regulations on insurance and securities companies do not reflect the group-wide risks posed by affiliates?? investments in shares. - The risks may be underestimated for capital regulations on insurance companies as the companies?? investments in non-consolidated affiliates are regarded as general stock investments. - As for capital regulations on securities companies, capital adequacy may be incorrectly assessed due to the deduction of the whole investment in affiliates from their capital.
Persistent Identifier of the first edition: 
Document Type: 
Research Report

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