The ongoing financial crisis is showing that the fates of a country’s banking sector and of its public finances are too much intertwined. Banking crises in Iceland, Ireland and other countries have wrecked the public finances of these countries. Currently, the European sovereign debt crisis is proving to be a major threat to the stability of Europe’s banking system.
The relationship between the banking sector and the public finances is a complex one:
government ownership of banks is prevalent, and rising on account of the crisis
behavior of private banks may be influenced by politics, for instance if politicians sit on the boards of banks
financial safety net is backstopped by national treasuries so that a banking crisis entails potentially huge fiscal costs
banks are subject to taxation, and potentially constitute a major source of tax revenues
government debt is a key asset category of banks, so that a government debt crisis can cause widespread bank distress.
Going forward, a key question is how the relation between the banking sector and the public finances can be reconfigured to bring back financial stability, including government finance stability.
We are inviting high quality submissions of theoretical and empirical nature. This conference aims to bring together contributions on topics including the following:
- The impact of government ownership of banks on efficiency, credit and financial stability
- Politics and banking.
- Subsidies implicit in the financial safety net, and how to eliminate them?
- How to cope with the too-big-to-fail and too-complex-to-fail phenomena?
- The fiscal costs of banking crises. How can bank regulation and resolution strategies reduce these costs?
- How to backstop an international bank? Is there need for institutional reform?
- Taxation of the financial sector. What are actual tax burdens on banks, how does taxation affect bank behavior, how to appropriately tax the financial sector, and what is the interplay between taxation and regulation?
- The sovereign debt crisis and the banking sector. The role of new institutions such as the EFSF.
- Does the Basle III framework adequately address bank holdings of sovereign debt?
- Charles Calomiris (Columbia Business School)
- Stijn Claessens (IMF, CEPR and University of Amsterdam)
- Reint Gropp (European Business School)
- Florencio Lopez de Silanes (EDHEC Business School)
- Enrico Perotti (University of Amsterdam, CEPR)
- Andrea Sironi (Bocconi University)
- Philip Strahan (Boston College)
- Wolf Wagner (Tilburg University)
Prof. Viral V. Acharya, New York University - Stern School of Business, CEPR.
- Olivier De Jonghe (EBC, Tilburg University)
- Harry Huizinga (EBC, Tilburg University)